2
Apr
Base rate cuts 'partially' passed on
The recent base rate cuts have been passed on by some lenders but
not all have seen the full benefit, it has been stated.
Royal Bank of Scotland Global Banking & Markets economist Ross
Walker noted there has been a "partial" pass through of recent
reductions in the base rate, something which has helped reduce some
mortgage costs.
However, he said, the fact that this has not been fully felt is a
reason the Bank of England has considered itself able to slash
rates as "aggressively" as they have.
"You couldn't reasonably have a mortgage based at 0.5 per cent
interest rate. It wouldn't reflect risk, it wouldn't reflect the
real cost of capital," he remarked.
Mr Walker's comments tally with the findings of a study by finance
website Moneyfacts, which showed that only 29 per cent of mortgage
providers have lowered their standard variable rates since the
latest reduction.
