CML response to rate cut

The Council of Mortgage Lenders welcomes today's rate cut by the Bank of England. This will help the wider economy, even if it cannot be reflected universally in lower mortgage rates. Where lenders feel they can reduce mortgage rates, they will. But their own cost of funds varies. For the specialist non-deposit taker lenders funding remains both expensive and scarce. And deposit takers - banks and building societies - also need to weigh up the position of their savings customers, and the rates they need to keep and attract retail deposits in order to achieve the funds necessary to be able to lend at all.

CML director general Michael Coogan said:

"Lenders want to help their borrowers, both those who are in difficulty and those who are not. This will help to support the wider economy, and ultimately strengthen their businesses too.

"But the practicalities are complex, and lenders are trying to achieve a range of potentially conflicting objectives at the same time. They are simultaneously trying to build up greater levels of capital and liquidity, help borrowers in difficulty and reduce repossessions, keep rates as low as possible for borrowers and as high as possible for savers in a very low interest rate environment, support new lending, and pay the significant costs of the recapitalisation scheme which have fallen across a wider range of lenders than just the recapitalised banks themselves.

"As we have said before, not all lenders are the same. It is not realistic to expect them all to react in the same way to the rate cut - although where they believe they can cut mortgage rates, they will. To achieve its objectives to support the housing market, the Government needs to engage with all lenders, not just the very largest, and we look forward to helping with this."