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Base rate cut may not be reflected in deals

The Building Societies Association warns that last week’s 0.25% base rate cut may not be passed onto borrowers immediately.

Adrian Coles, director-general of the BSA, says the cut will be good news for first-time buyers and borrowers coming off fixed rate deals.

But he adds: “The Monetary Policy Committee’s decision may not be reflected in changes to LIBOR rates.

“As a result the reduction may not immediately be seen in the products on offer.” Stuart Law, chief executive of Assetz, says: “I don’t think the base rate cut was big enough. A significant reduction of 0.5% was needed to have any impact on the market.”

Brian Murphy, head of lending at Mortgage Advice Bureau, says the cut was a necessary response to worries about economic growth.

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Dear Delia…

My client is looking to buy a house in need of renovation for £250,000. He wants the deal to be done as quickly as possible to secure the best terms from the seller and intends to refurbish it. If improved, he knows it will be worth considerably more than it is now. He anticipates a selling price of £330,000 for the improved property. What deals should he consider for buying and then improving the property?

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