Legal & General: Borrowers unlikely to feel benefit of rate cut

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Legal & General: Borrowers unlikely to feel benefit of rate cut

Thu 10th Apr 2008

Legal & General has predicted that today's decision by the Bank of England to cut interest rates by 0.25 per cent to five per cent will have a "minimal" impact on borrowers.

It states that anyone with less than a 25 per cent deposit will be facing higher rates on their mortgage than they were six months ago.

The bank blames tiered pricing systems for mortgages that have resulted from poor credit conditions for the rate rises.

In addition, Legal & General notes that current fixed rates are more in line with LIBOR, the inter-bank lending rate, than the Bank of England base rate.

"Until credit for the lenders becomes more readily available, those looking to buy a house or remortgage will continue to feel the pain," a spokesperson for the company said in a statement.

Last month the Bank opted to hold rates at 5.25 per cent, after lowering them in February.

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