Base rate ‘should be cut further’

A call has been made for the Bank of England to reduce the base rate even further, despite it having been at the lowest level in the institution’s 315-year history since March.

The Association of Mortgage Intermediaries (AMI) suggested that the present figure has not fallen enough to open up the market for those seeking mortgage and remortgage products.

AMI director Robert Sinclair suggested: “A further cut in rates, indeed a move to negative rates as suggested by some commentators, might well force banks into lending more.”

Yesterday the Bank’s Monetary Policy Committee announced that the rate is staying unchanged, while also agreeing to maintain its quantitative easing level at £175 billion.

Commenting on the mortgage market, director general of the Council of Mortgage Lenders Michael Coogan said the credit crunch had weakened the link between the base rate and mortgage costs.

Other factors, such as the level of customers’ deposits, were influencing lending decisions by banks, he said.

Mr Coogan added that despite this, the level of choice in the market “is successfully beginning to widen”.

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