Speculation is growing as pressure builds up on the Bank of England to cut interest rates again on Thursday this week. The only real doubt is whether a cut of 0.5 or a full 1% will take place. This will take the Bank of England base rate lower than it has ever been in its 300 year history. It is hoped that this will release funds for lending to both businesses and the domestic market. The government will also want mortgage companies to pass these new rates on to tracker customers, but there is a growing resistance amongst the banking sector to allow their clients to benefit from these low lending rates. Just because they will be able to borrow at less than 2%, mortgage companies obviously feel that their right to profiteer from the situation over-rides the interests of their clients.Just to retrace our steps for a few seconds...how did the credit crunch come about? oh yes, it was the banks trying to make money from sub-prime mortgages wasn't it?? So the banks that caused the problem in the first place are now benefiting from huge injections of cash from the taxpayers. The base rate has plummeted to allow more cash into the system, borrowing is now cheaper than it has ever been, and yet the self-same banks refuse to pass on the benefits to their lenders - those same tax-payers who are funding their lavish life-style... I don't want to be overly dramatic, but revolutions have come about with less provocation than this!!
Related posts:
Negative interest rates
Mortgage safety net
When will the property market recover?
sub-prime mortgages to blame?
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