View more on these topics

Base rate drops to 2%

The Bank of England has slashed the base rate to 2% a level not since 1939.

The last cut, an emergency 1.5%, was intended to stimulate spending and stave off recession.

Adrian Coles, director-general of the Building Societies Association, says: “Homeowners will welcome the MPC’s decision to cut the Bank Rate by 100 basis points to 2%. However, not all mortgage borrowers will find today’s fall mirrored by their lender – building societies have to balance the interests of borrowers and savers. Although low interest rates are good news for borrowers, they are not so good for savers.”

Michael Coogan, director general of the Council of Mortgage Lenders, says: “Lenders want to help their borrowers, both those who are in difficulty and those who are not. This will help to support the wider economy, and ultimately strengthen their businesses too.

“But the practicalities are complex, and lenders are trying to achieve a range of potentially conflicting objectives at the same time.

“They are simultaneously trying to build up greater levels of capital and liquidity, help borrowers in difficulty and reduce repossessions, keep rates as low as possible for borrowers and as high as possible for savers in a very low interest rate environment, support new lending, and pay the significant costs of the recapitalisation scheme which have fallen across a wider range of lenders than just the recapitalised banks themselves.

“As we have said before, not all lenders are the same. It is not realistic to expect them all to react in the same way to the rate cut – although where they believe they can cut mortgage rates, they will. To achieve its objectives to support the housing market, the government needs to engage with all lenders, not just the very largest, and we look forward to helping with this.”

Recommended

Exact launches website

Exact, the reincarnation of edeus, has rolled out its website today with full product details.

House prices fell by 2.6% in November

House prices fell 2.6% in November, says Halifax. The lender’s research has found that the average house price is now £163,445 – 124% higher than in 1998.

King & Co must pull their finger out or else

Another week at the coal face. Actually I’ve had a couple of days off recently so I’m feeling more chilled than I did a few days ago. Everything is ticking along pretty much as it has all year and sad to say it’s all quiet on the broker front.

Reintroducing the right-to-borrow

Looking at the current mortgage funding crisis and the fall of the former building societies such as Bradford & Bingley and Halifax, it is fascinating to note that back in the 1980s the Building Societies Association was lobbying parliament for new legislation which would allow its members to become mortgage banks.And intriguingly, a key player […]

Employees care about their health

It’s important employers remember this like an alarm going off in their head. Employees care about their health. And they’re calling on employers to provide them with health benefits. In a survey we conducted, we asked 1,005 UK SME employees to choose the top three employee benefits they would value most:  48% of employees voted […]

Newsletter

News and expert analysis straight to your inbox

Sign up