National Homebuyers: Cut to interest rates will not affect mortgages

Even if the Bank of England cuts the base rate of interest, the mortgage market will remain unaffected.

[UKPRwire, Wed Nov 21 2007] That is according to Firstrung, which describes the market as being "detached" from interest rates.

It spells bad news if you are looking for someone to buy your property as many people will be put off entering the market while rates remain high.

In addition, current homeowners could get into financial difficulties and may end up facing repossession.

Paul Holmes, chief executive officer at the firm, said that a cut to interest rates, as predicted by the Bank last week, would have no difference whatsoever mortgage rates.

"The average standard variable rate, if you look at all the lenders, is 7.75 per cent. So it's over two per cent above the base rate," he commented.

"The lenders are completely detached – the Bank of England might lower rates tomorrow, but the lenders would say: 'That's fine, but we still need to make a profit'.

"There is a dislocation between the Bank of England and what lenders lend at. It's completely different now. That was one of the conventions that was broken after this credit crunch," added Mr Holmes.

Sell house for cash property company National Homebuyers says changes to lending criteria overall will bring prices down further. "A continued lack of buyers will mean properties on the market will have to be sold at a reduced rate in order to acheive a completion" says director Julian King.

"We are already speaking to hundreds of people each week who are looking for a quick property sale solution as their forecase for the coming year is far from acceptable".

Mr King is a director of National Homebuyers, the UK's leading quick house sale property company.

Bookmark this release: Del.icio.us - Digg - Furl - Blinklist - Reddit