Rate cut 'has varied effects on homeowners and borrowers'

06 February 2009



The Bank of England monetary policy committee has voted to reduce the interest rate in the UK by 0.5 percentage points - a move which has received mixed responses. The Royal Institute of Chartered Surveyors says the decision "may provide a small boost" to the economic outlook, urging the government to consider other measures to complement it.

"Research by BSA [Building Societies Association] has found that concern over getting a mortgage or getting a large enough mortgage is a much greater worry than affording mortgage repayments," comments Adrian Coles, Director-General of the BSA. The news comes as the Halifax reports a rise of 1.9 per cent in house prices last month, the first increase for 11 months.

The Council of Mortgage Lenders believes the rate cut is unlikely to inspire more lending, with affordability the main issue for consumers at the moment. Borrowers are reminded that they should do all they can to keep up with repayments on their mortgage, with those who are struggling advised to get legal guidance.

Michael Larcombe, partner in the property practice comments: "Many borrowers have done very well in the recession with falling interest rates. Some borrowers, especially those on tracker mortgages, are paying substantially less than they used to do .

"It is not the level or affordability of mortgage repayments which is causing problems with the housing market but job security, speculation about property prices, availability of funds and the banks reluctance to lend other than to those with substantial equity.

"There is already talk of 'green shoots' in the residential property market especially for property investors where the return achieved on rented property is considerably higher than on other investments."

If you require legal advice, for either your private affairs or organisation, please contact Gerrards Cross based B P Collins Solicitors or give us a call on 01753 889995.

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