27
Mar
Another rate cut 'could be needed'
A further cut to the base rate of interest by the Bank of England
may be needed in the attempt to reduce the cost of borrowing
between lenders, it has been claimed.
Katie Tucker at Charcol said that that this in turn could be a
welcome relief for property owners who may see the impact in lower
rates.
However, the Bank may be put off from this line of action as
inflation could rise above three per cent, she said, a development
that would mean governor Mervyn King would have to write to the
government.
"Lenders' own cost of borrowing now, for fixed rates and variable
rates alike, is so high that they would need to charge in the
region of three-quarters of a per cent above Bank rate, or an
equivalently large fee, just to break even," Ms Tucker
commented.
She added that it is "no surprise" that lenders' rates have
increased recently as they attempt to mend their
"piggy-banks".
The Bank of England's monetary policy committee is set to meet
again on April 9th and 10th to decide whether rates should be
lowered or not.