Bank of England Rate Not Always Reflected in Mortgage Rates

Posted 2008-01-15

David Kuo, head of personal finance at the Motley Fool, took time to explain that the link between the interest rate set at the Bank of England and the interest rate set by mortgage companies is not iron-clad. He explained that while many consumers eagerly awaited the expected interest rate cut by the Bank of England, these consumers may not necessarily feel the reprieve in their own mortgage payments, as mortgage lenders can decide whether or not to pass on the lower rate to their customers.

Unfortunately for many customers, he explained, mortgage companies are currently focusing on “rebuilding their battered businesses,” (referring to the negative impact the mortgage crisis had on many lenders).

Although many experts expect the Bank of England to continue cutting the interest rate in an attempt to kindle the British economy, most experts still expect the rate of personal insolvencies to greatly increase for the 2008 year.

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