AMI calls for 1% cut in interest rates

The Association of Mortgage Intermediaries is calling for a 1% cut in interest rates ahead of the Bank of England\'s Monetary Policy Committee meeting this week in a bid to spur economic growth.

It also wants to see wider government intervention in the mortgage market.

Robert Sinclair, director of AMI, says: “AMI is calling for the Monetary Policy Committee to cut interest rates by 100 basis points to 2%.

He says: “This is essential to keep the wider economy moving forwards in combination with the initiatives announced in the pre-Budget report last week.  However, on its own, this move will not have the positive effect we need to get the mortgage market moving again.

“Although such a significant cut is necessary the negative impact of a lower interest rate on savings will make it harder for Banks to lend. It is therefore essential that the Government intervenes swiftly to implement Sir James Crosby’s recommendations for the mortgage finance markets.

“Government guarantees of new mortgage securities will help to ease the future funding of mortgage loans. We want to see the Chancellor’s in-principle support given in the Pre-Budget Report put swiftly into action.”