Rate cuts 'unlikely to help mortgage seekers'
Cuts in the Bank of England base rate are unlikely to help those thinking of taking out a mortgage, it has been argued.
According to personal finance website Fool.co.uk, financial institutions are failing to pass reductions in rates on to home loan customers.
Yesterday the Bank's Monetary Policy Committee lowered the official rate by 0.5 per cent to 1.5 per cent in a bid to make credit more affordable.
But financial expert at Fool.co.uk David Kuo explained that this will have little impact and called for the government to instead introduce an income tax cut.
"The harsh reality is that banks are both unwilling and unable to cut the cost of borrowing further if they are to remain viable," he said.
Those wishing to avoid difficulties in obtaining a mortgage may prefer to rent or buy instead, particularly as recent Land Registry figures showed prices in London had fallen by more than ten per cent in the year to December 2008 - meaning property owners could be facing negative equity.
Published 9th January, 2009
© 2009 Estates IT Limited
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Cuts in the Bank of England base rate are unlikely to help those thinking of taking out a mortgage, it has been argued.