Mortgage News

Rate cut "very helpful" for mortgage holders, says CML - 11/12/2007

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The Council of Mortgage Lenders (CML) has predicted that mortgage borrowers will find this month's rate cut eases their financial pressure.

Last week, the Bank of England reduced the cost of borrowing by 0.25 per cent to 5.5 per cent.

Sue Anderson, the CML's head of external affairs, said that the rate cut should be welcomed as good news by borrowers, even if its effects take a while to materialise.

"Clearly it is very helpful," said Ms Anderson, adding that the move by the Bank of England should help restore market confidence as well as revitalise faith in financial authorities and their ability to respond to consumer needs.

"Even if it does not result in instant changes to the monthly payments, it helps consumers to have an expectation that they are not looking ahead at the face of further interest rate rises, which is what people were previously expecting," the head of external affairs stated.

However, the answer to the question of whether 2008 will be easier for mortgage borrowers will vary according to individual circumstances, she added.

Mainstream mortgage borrowers should find that their rates do not worsen and could even improve next year, she maintained, while people coming off short-term fixed-rate deals could find that their rates rise.

Meanwhile, subprime mortgage holders may find it particularly difficult to remortgage, as "the availability of funding has tightened", Ms Anderson said.

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