CML: Not all will benefit from rate cut

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CML: Not all will benefit from rate cut

Sub-prime borrowers whose mortgage schemes are set to mature are unlikely to benefit from the Bank of England's (BoE's) cut in interest rates last week, a Council of Mortgage Lenders (CML) expert has argued.

With the availability of funding having tightened under the impact of the credit crunch and earlier, such borrowers are likely to face harder times financially as they come on to a follow-on deal, said Sue Anderson, head of external affairs at the CML.

Borrowers coming of short-term fixed-rate deals are also expected to witness a higher rate on their next mortgage deal despite the BoE's reduction of the base rate from 5.75 per cent to 5.5 per cent last Thursday.

Mainstream borrowers, however, may find that mortgage rates are likely to improve and moreover will not get worse, the CML head official said.

Cash-strapped owners may have received an early Christmas present with the BoE's monetary policy committee deciding to cut rates for the first time since August 2005, Ms Anderson indicated.

"It is exactly what the market needed, it helps to underpin confidence again and it helps to restore faith that the authorities do have an eye on what is happening on the consumer side of the economy," she commented.
ADNFCR-323-ID-18387992-ADNFCR

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