The surprise 1.5 percent interest rate cut failed to have any real effect on financial indicators, at the close of business on Thursday, and the market reaction (or lack thereof) is a sorry indication of the current state of the economy.
Alistair Darling has met with a group of leading banks to urge them to pass on rate cuts to customers, but whether or not they will remains to be seen. Several lenders, including Lloyds TSB, Nationwide and Alliance and Leicester have pulled all their tracker deals off the market, meaning that first time buyers looking to take advantage of the low rates will miss out.
Experts have called for the government to do more to ensure that customers feel the benefits of the rate cut, and are suggesting that it is up to the lenders to revive the flagging housing market.
Nick Rhodes, Sales Director of Independent Mortgage Helpline, comments: "The fact is that the three-month Libor rate is a now lower than it was a year ago, yet in October last year a borrower taking out a 90% LTV mortgage would have paid typically 5.99% for a two-year fixed rate deal, but the same deal today would cost them in the region of 8.14%. There is no excuse for this profiteering.
“The recovery of the property market, which is surely in everyone's interest, lies in the hands of lenders.”
By Danielle Williams
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