Rate reduction has little affect on mortgages

17 2008
Last week's reduction to the base rate of interest had little affect on new mortgage borrowers, showing that it pays to rent.

John Charcol has commented on the decision, which saw interest rates fall from 5.25 per cent to five per cent.

That firm said that it was regrettable but unsurprising that the rate had little effect and pointed out that it is new mortgage borrowers who are being hit particularly hard.

"Lenders that have reduced their Standard Variable Rates, as well as the trackers for existing borrowers will in fact be netting less revenue now, and it is the new borrowers who are feeling the resultant pang imposed in their rates," commented Katie Tucker from John Charcol.

The reason mortgage rates remain high is that the rate at which banks lend to each other is currently high.

This is because they are concerned about the security of the mortgage assets held and are not prepared to risk securing loans against them.ADNFCR-1219-ID-18556426-ADNFCR

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