Brokers call for Base Rate cut

Ramesh Sharma

February 11, 2006

With the Bank of England keeping the Base Rate on hold this month at 4.50 per cent, intermediaries are looking at the upturn in swap rates and want a cut to head this off.

The Woolwich has become the latest lender to withdraw its fixed and buy-to-let rates in response and many brokers are urging clients to move now to get the best deal.

Ken Sives, partner at Sives Financial Services, said: “From a selfish point of view, I would like to see a cut but I’m trying to get my clients to act now and move onto fixed rate deals before the lenders take them away.”

Despite the desire of brokers for a cut, Lawrence Sanders, economist at Bristol & West Mortgages, believed that with property prices showing continued growth, the housing market is unlikely to force rates downward and it will be other factors within the wider economy that will eventually induce a cut.

He said: “Despite positive results from the fourth quarter, year-on-year growth is still behind the predicted trends so that will keep rates steady. The Bank of England may reduce the rates by 0.25 per cent in the summer to retain confidence in the economy and help head off any further rise in unemployment, but at the minute the outlook is positive and there will be steady progress.”

However, Simon Chalk, mortgage planner at Mortgage Portfolio Services, believed brokers should be worried about other factors. “High levels of debt and high property prices are currently the biggest factors putting people off buying a house so you can have cheaper rates but with these factors still causing concern, they need to be addressed before a rate cut will have much effect,” he said.

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