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Rate cuts not getting to mortgage customers 'a problem'
26 February 2008
Mortgage lenders' failure to pass on the cuts in the base rate of interest to their customers is "a continuing problem", according to an economic research consultancy.
Despite a cut to the Bank of England base rate last month, lenders have not dropped the rates on their mortgages, meaning customers are not benefiting from the lowered rates.
Nationwide this week raised interest rates on mortgages which cover more than 75 per cent of the property's value by 0.2 per cent.
The lender blamed higher mortgage funding costs and a cooling housing market.
Paul Dales, economist at Capital Economics said: "Looking at the money market's at the moment, it seems to be a continuing problem. The money markets rates have actually risen since the Bank cut their base rate in February, whereas normally you would expect to see them fall sharply.
"There does seem to be a kind of stickiness in that lever of bringing monetary policy to the markets and then the economy."
