CML news & views

Earlier this year, the chancellor said the lower borrowing costs were "part of the deal" after the Bank of England’s monetary policy committee cut rates. But 75% of customers have fixed or tracker mortgages, with the rates paid by borrowers fixed by contract. For customers on variable rates, the key is the lender’s margin over the cost of raising funds in the market, not the Bank rate.

In our response to consultation of measures to promote financial stability and improve depositor protection, we welcomed the steps taken by the Bank of England to encourage greater liquidity in financial markets. We urge the Bank to continue to respond flexibly and innovatively to changing market conditions.

Market turmoil has rendered planning for greater integration of European mortgage markets pointless at this stage. We believe the European Commission should therefore abandon plans to encourage greater market integration for now. Instead, it should concentrate on its work on financial stability. Before planning for market integration, we will need a much better understanding of what future market conditions will look like.

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