0.25% cut not enough, says expert

A cut of 0.25 per cent in the Bank of England base rate this week will do very little to make mortgages affordable, an expert has suggested.

Scotland on Sunday financial columnist Teresa Hunter has suggested that such a reduction by the monetary policy committee (MPC) when it meets this week "will do nothing whatsoever to either bring down borrowing costs, or make it easier to get an affordable loan".

She said only a 0.5 per cent trimming could "encourage banks to stop behaving like scalded cats", referring to the numerous recent increases in mortgage rates for new customers which lenders have been introducing.

Recent surveys have shown that a quarter-point reduction by the MPC is what most experts expect.

These include 75 per cent of those polled in the British Chambers of Commerce poll that is yet to be published, reports Home Move.

Last week's Adfero poll produced the same result, while 48 of the 63 interviewed by Reuters tipped a 0.25 per cent trimming.

While mortgage costs remain high despite rate cuts, those looking to get on the housing ladder may consider the alternative strategy of self build.


© Adfero Ltd