Majority of mortgage lenders act on base rate cut

Predictions that mortgage lenders would be more interested in restoring profit margins than helping hard-pressed home buyers have been allayed by the news that since the base rate was cut from 5.75% to 5.5%, at the beginning of this month, over a half of mortgage providers have agreed to cut their rates.

Latest figures from Moneyfacts.co.uk, the price comparison website, show that many of the larger lenders have dropped their variable rates by 0.25%, in line with the Bank of England’s reduction.

However, across all the lenders surveyed, 23% have reduced their rates by less than the full quarter-of-one per cent.

Moneyfacts analyst, Julia Harris, describes the market as “still in flux” and urges borrowers to hold off making a decision about a mortgage or remortgage until it has settled down, if possible.

Meanwhile, Robin Amlot of finance website, Moneyextra.com believes that: “The outlook for the mortgage market in 2008 is fairly grim.”

While he agrees that interest rates should be significantly lower in 12 months’ time, he thinks “we may have an uncomfortable journey getting there”.

In addition, Moneyfacts has reported that the average mortgage taken out by first-time buyers now stands at £133,943.

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