CML: Not all borrowers will benefit from Bank rate cut

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CML: Not all borrowers will benefit from Bank rate cut

Wed 7th May 2008

Following the government's call for lenders to pass on the Bank of England's rate cut to their customers, the Council of Mortgage Lenders (CML) has noted that around 75 per cent of borrowers are on fixed or tracker mortgages.

As a result, the rate they pay is set by the contractual terms of the loan.

For those borrowers that are on a variable rate, "the key determinant is not the Bank rate, but the margin over the lender's cost of funds", the organisation pointed out in its monthly newsletter.

The CML also praised the Bank of England's recent decision to introduce a bond scheme in April aimed at introducing greater liquidity into the market.

In a statement released at the time, it said the scheme is an "important step to tackle funding market difficulties, helping to bring further stability and confidence to the financial markets".

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