Council of Mortgage Lenders director general Michael Coogan says: “This cut presents immense challenges for lenders, leaving little scope for them to lower discretionary mortgage rates . Savings are the lifeblood of mortgage lending, and unless lenders can offer competitive rates to savers, their ability to offer new mortgages is restricted.”
Building Societies Association director general Adrian Coles says: “Lower interest rates reduce the incentive to save and this limits the flow of funds into the mortgage market. This decision is a kick in the teeth for savers and will also harm the aspirations of the many people who are finding it difficult to get a mortgage.”
The monetary policy committee says the 0.5 per cent cut was taken despite possible “counter-productive effects on the operation of some financial markets and on the lending capacity of the banking system”.