Base rate cuts may not lead to mortgage savings

Posted 2008-01-5

Cuts to the base rate of interest may not lead to lower repayments for mortgage holders. Speaking after the Monetary Policy Committee’s (MPC) decision to hold the base rate in January, Motley Fool’s David Kuo said:

“The link between the MPC’s decisions and mortgage payments is by no means certain.”

Despite Chancellor Alistair Darling urging mortgage lenders to pass the December cut on to consumers, there is no obligation for them to do so.  Following the credit crunch, the main aim for many financial services organisations is to stabilise their business.  On this, David Kho added:

“Many homeowners are unlikely to reap the benefits, even though there are indications that the Bank of England may continue to cut interest rates to stimulate the flagging British economy.” 

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