Interest rate cut 'still needed'

Independent mortgage firm Charcol has said that there needs to be a further cut in interest rates and believes this may in fact take place.

Spokesperson Katie Tucker commented that while a situation in which inflation was rising would not normally see a rate cut, the wider situation in the mortgage market may change this, "as mortgage lenders' own cost of borrowing is high, and a further Bank rate cut may be used to relieve this."

Such a move would see Bank of England governor Mervyn King being willing to take the responsibility for inflation reaching the three per cent level at which he would have to write a letter to the chancellor Alistair Darling explaining himself, something Ms Tucker said homeowners would hope Mr King was not "deterred" by.

Those doubting that the monetary policy committee (MPC) will cut rates again soon can avoid worrying about mortgage costs by using the self build method of obtaining a home.

Last week the minutes of the March meeting of the MPC revealed that the committee voted by seven to two to keep the base rate at 5.25 per cent.


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