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Credit crunch impact on mortgages 'surprising'
15 April 2008
An economist has expressed surprise at the scale of the impact the credit crunch has had on mortgages.
Paul Dales of Capital Economics – a leading financial research firm – said that he had not expected as many mortgage lender rates to rise and so many to pull their products.
He added that the Bank of England's modest interest rate trim announced last week was "not particularly encouraging" but had been expected.
"In any other financial crisis the Bank has been very speedy to cut rates quite heftily, but this time around they've got to worry about inflation at the same time, and they're trying to do this balancing act," he said.
"I'm not really surprised by it, it's not particularly encouraging but it's not really surprising."
Last week, a number of mortgage providers were accused of 'cashing-in' on the credit crunch by refusing to reduce their interest rates in line with the Bank of England's base rate.
