Will it have the desired effect of stimulating economic recovery? What are the likely effects on mortgage lending?
Robin King, movewithus founding director, gives his thoughts: “Any cut in interest rates has to be welcomed. The Bank of England is doing their part, now the Government needs to put pressure on lenders to pass the cuts on to borrowers and make deposits more affordable for regular home buyers. My hope is that we’ll see the effect of the cut on new mortgage products that lenders are due to introduce in early 2009.” “The underlying demand is there and it’s never been cheaper to own a home. Affordability isn’t the issue; it’s the availability of reasonable loan to value mortgages. If the Government backed a scheme that covered the top 20% of a home’s equity – some sort of ‘indemnity guarantee’ – lenders would be able to start lending again.”