Mortgage lenders respond to interest rate decision with loan rate cut.
UK mortgage lenders have responded to the Bank of England’s decision to cut interest rates by cutting home loan rates.
The Bank cut the base rate of interest to 5.25% in response to the ongoing credit crunch and worries over the economy. Mortgage lenders are now passing on the cut to homeowners resulting in a £100,000 mortgage decreasing by £16 a month.
David Kern, economic adviser to the British Chamber of Commerce said:
“The MPC’s decision to cut interest rates to 5.25% per cent was necessary for the economy. In the face of worsening global and domestic conditions, a refusal to act would have entailed unacceptable risks.”
Mr Kern believes that the move may not be enough, with the more acute threat of rising inflation. He added:
“We would have welcomed a bold UK move five per cent.”