Tony Swift, partner at Barnetts , says: “Although lowering the interest rate has obvious benefits to those homeowners who have tracker mortgages, or whose lender will pass the interest rate drop onto them, this is simply the tip of the iceberg.
“Rate announcements are always high profile and are very important to the state of the economy, but in today’s volatile market, the rate drop seems almost irrelevant. Instead, it is the lender’s criteria and variable rates that are driving the current marketplace.”
It has become apparent to Barnetts that buyers quickly lose confidence in the market when they hear stories of lenders withdrawing or refusing to renew mortgage deals and the firm is calling for action to be taken to put some confidence back into the market.
Barnetts says that with many lenders either raising their interest rates or completely removing products from their portfolio, the restrictions on lending has become much tighter.
Swift says this, together with the increasing number of people coming out of fixed rate mortgages every month and struggling to find a similar mortgage, is evidence that it is the lenders that hold the reins.
He adds: “The main problem in the current sale and purchase market is that there just aren’t enough buyers who have the finance in place and are in a position to start the purchasing process.
“The real worry for the economy as a whole is the nose dive that’s likely to come to the luxury market – holidays, eating out, cars, etc.
“It is true to say that although a 0.25% rate cut won’t have any long term impact on house prices, it is a small step to bringing a bit of confidence back to the market so that is good news. However, something more needs to be done to ensure that we avoid a crisis like the one currently happening in the USA.”