No Mortgage Savings for Homeowners

Posted 2008-01-2

According to financial management website fool.co.uk, cuts to the base rate will not necessarily be passed down to borrowers.

The monetary policy committee (MPC) chose to cut base rates in December, but decided to hold it steady in January.

Although Chancellor Darling petitioned financial service providers to pass on December’s base rate cut to mortgage payers, many lenders are wary of doing so in the current economic climate.

David Kuo, head of personal finance at fool.co.uk, pointed out that mortgage loan providers are not obliged to alter their rates for consumers. Many may choose not to do so in order to concentrate their energies on rebuilding their businesses. In all likelihood, homeowners will not see any savings at their level.

Kuo doesn’t anticipate the situation to change much in the coming year. “Homeowners are unlikely to reap the benefits even though there are indications that the Bank of England may continue to cut interest rates to stimulate the flagging British economy.”

In addition, personal insolvencies are predicted to rise this year.

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