Rate cuts 'have had impact on mortgage finance'

03-Mar-2009

Interest rate cuts have lowered mortgage rates and meant borrowing is less of a burden for consumers, an expert has said.

Trevor Williams, economist at Lloyds TSB, believes base rate cuts from the Bank of England since the onset of the economic downturn mean there is money in people's pockets compared to beforehand.

"It has certainly reduced the cost of borrowing, and any interest debts. The burden of debts households have got are lower than they would have otherwise been," he said.

Mr Williams' comments come after interest rates were cut to one per cent last month by the Bank of England.

However, although many first-time buyers might still be struggling to afford to get on to the property ladder, the economist believes it could be another 18 months or two years before the full impact of rate cuts will be realised.

This might encourage prospective first property buyers to save for a deposit in the hope of obtaining a mortgage while house prices are still relatively low.

Louise Cuming from price comparison website Moneysupermarket yesterday advised Britons to rent or live with their parents and to use their excess income to save up for a deposit.

FirstRungNow.com - how to buy a house, from finding your first flat or first house, first time buyer mortgages, shared ownership, buying with friends, gifted deposit, part buy part rent - all a first time buyer could possibly need.

Living with parents 'simplest solution for FTBs'Parents stepping in to help first-time buyersSome lenders 'loosening their criteria for FTBs'

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