27 Mar

Another rate cut 'could be needed'

Another rate cut 'could be needed'

A further cut to the base rate of interest by the Bank of England may be needed in the attempt to reduce the cost of borrowing between lenders, it has been claimed.

Katie Tucker at Charcol said that that this in turn could be a welcome relief for property owners who may see the impact in lower rates.

However, the Bank may be put off from this line of action as inflation could rise above three per cent, she said, a development that would mean governor Mervyn King would have to write to the government.

"Lenders' own cost of borrowing now, for fixed rates and variable rates alike, is so high that they would need to charge in the region of three-quarters of a per cent above Bank rate, or an equivalently large fee, just to break even," Ms Tucker commented.

She added that it is "no surprise" that lenders' rates have increased recently as they attempt to mend their "piggy-banks".

The Bank of England's monetary policy committee is set to meet again on April 9th and 10th to decide whether rates should be lowered or not.ADNFCR-1222-ID-18525231-ADNFCR

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