Rate cut 'won't help mortgage strugglers'

03/02/2009

The Bank of England won't help matters much for Britons struggling with their mortgage payments if it cuts interest rates again, an industry group said yesterday.

According to the Building Societies Association (BSA), due to the credit crunch people are worried far more about their difficulties in getting a mortgage in the first place than they are about the loan's cost.

In a recent poll from the organisation, 56 per cent expressed concern about the availability of loans - compared to 37 per cent who worry about rates.

Bank of England interest rate cuts generally have little effect on the number of loans put on the market, or loan firms' selection process for borrowers.

Adrian Coles, director general of the BSA, added that savers would be damaged by a Bank rate cut.

"We need to ensure that those with at least some capacity to supply funds for mortgage lending - personal savers - are encouraged to do just that and that requires the [Bank] to refrain from making further cuts to the Bank rate at least until the impact of recent reductions becomes clearer," he said.

The Bank rate currently stands at 1.5 per cent - having been reduced from five per cent over recent months.

Tags; Housing Debt and Bills, Young Family Finances, Recent Graduate Debt,

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