Lenders need to pass on rates

21-Dec-2007

Moneysupermarket.com has said that first time buyers and other borrowers may not be enjoying the effects of the recent interest rate cut due to lenders not passing on the 0.25 per cent drop.
Earlier this month Moneyfacts.co.uk reported that a perhaps-surprisingly large number of lenders had passed on the full 0.25 per cent drop, but moneysupermarket is less convinced.

Just one in five lenders have immediately passed on the cut, according to the price comparison site, potentially denying buyers the chance to get the best first time buyer mortgage.

"In the current economic climate I would have liked to have seen providers showing a little more compassion towards borrowers who have spread themselves thin over the Christmas period," said moneysupermarket.com head of mortgages Louise Cuming.

Ray Boulger from John Charcol, meanwhile, has said that there is nothing unusual about such trends, and if anything, certain announcements had proved somewhat surprising.

"The Halifax announcement was pretty well immediately after the bank rate announcement and Nationwide very soon afterwards; normally the announcement isn't quite as quick as that," said Mr Boulger, speaking on BBC 4's Today programme.

"I do wonder whether perhaps the Chancellor or maybe the Prime Minister, or the Bank of England governor Mervyn King, perhaps had a quiet word in the ear of the chief executive of those lenders, because if those two passed a cut on immediately that would encourage others to do the same," Mr Boulger speculated.

The Bank is set to provide a further boost to first time buyers in the new year as rates are cut once again.

2008 'will be a double edged sword'.


New buyers warned not to get ahead of themselves.

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