Rate cuts not passed on, says Hammond

Shadow chief secretary to the Treasury Philip Hammond has said the recent interest rate cuts have made no difference to many mortgage borrowers as lenders have not passed them on to their variable rate mortgage customers.

Responding to a report from Capital Economics stating that December's cut was not passed on in full by some lenders, Mr Hammond commented: "This is more bad news for homeowners already feeling the pressure from soaring living costs and falling take-home pay."

He added that it meant that for homeowners "the Bank of England base rate no longer reflects their borrowing costs".

The comments echo those of Shawn Luetchens, managing director of property website HotProperty.co.uk.

He said today that a base rate cut "doesn't necessarily" mean that lenders will follow this up by passing on the rate cut.

The situation may mean that those taking out mortgages are worse off than they hoped to be after the recent rate changes.

Some may decide this is a good reason to opt for the alternative housing strategy of self build.


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