Rate cut may be in vain for mortgage market
The Bank of England's Monetary Policy Committee (MPC) is expected to cut the base rate by at least 0.5 per cent when it meets this week, according to a new poll.
However, such a move may have little impact for anyone considering taking a mortgage to buy a London property as banks have often failed to pass on rate cuts.
The Reuters poll of 62 economists found that all believe there will be a 0.5 per cent rate trimming, with seven forecasting a 0.75 per cent cut and some even suggesting a reduction of a whole per cent may occur.
However, price comparison site Moneysupermarket.com has noted that many lenders have failed to pass on last month's rate reduction.
It stated that 30 lenders have not passed on the 0.5 per cent cut to their standard variable rate customers, while 34 have only passed on some of the reduction.
Such a finding may suggest that banks are not keen to lose profits during the financial crisis, which may be a good reason for people to rent instead.
Published 4th November, 2008
© 2008 Estates IT Limited
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The Bank of England's monetary policy committee (MPC) is expected to cut the base rate by at least 0.5 per cent when it meets this week, according to a new poll.