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Rate cut to boost troubled borrowers?
8 April 2008 10:30
Borrowers struggling to find affordable mortgages following the credit crunch should receive a boost this week in the shape of a base rate cut, a new straw poll has suggested.
Latest figures from the Bank of England indicate that lending dropped by 8.1 per cent to £27.1 billion in February, with the Royal Institution of Chartered Surveyors warning that this trend is likely to continue as lenders raise rates and close business to new customers.
Yet the market may receive some stimulus from the Bank's Monetary Policy Committee (MPC) this week, with six out of eight commentators surveyed by Adfero forecasting that it will lower the base rate by 0.25 per cent to five per cent on Thursday.
Howard Archer from economic analyst Global Insight explained that the MPC is likely to be swayed by tightening credit conditions, while Ross Walker from the Royal Bank of Scotland also noticed several indicators from the MPC that it is readying to cut rates.
Nor do experts believe that this will be the last reduction, with Mr Archer predicting that the rate could fall as low as four per cent by the start of 2008, while Mr Walker expects it to eventually dip to 4.5 per cent and Nationwide to 4.75 per cent by the end of this year.
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