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Base rate cuts fail to stimulate housing market

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by David Masters
Base rate cuts fail to stimulate housing market

Potential first time buyers are being put off the housing market by uncompetitive mortgage deals, according to price comparison site Moneyfacts.co.uk.

Research by Moneyfacts.co.uk found that the average standard variable rate (SVR) for mortgage-holders with less than 25% deposit is 4.9%.

Moneyfacts.co.uk analyst Michelle Slade said there is ‘simply no incentive’ for first time buyers to shop around for a good deal, because there are no good deals available.

She also accused banks of rationing credit and refusing to pass on the Bank of England’s rate cut.

“The banks are finding reasons not to lend at all,” Slade said.

“Borrowers may want to borrow and lenders may start to lend again, but unless they lower rates on new deals we are going to continue with this stalemate position.”

Over the past four months, the Bank of England has cut interest rates by 3% in an attempt to reduce mortgage interest rates and stimulate the economy.

Last week the government stepped in with a new economic package that underwrites mortgage lenders’ financial risk.

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News posted: January 28, 2009

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