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Chancellor Asks Lenders to Pass On Full Interest Rate Cut
The Chancellor of the Exchequer has called on mortgage lenders to “play their part” and ensure that homeowners feel the benefit of recent cuts in interest rates.
Speaking from a G7 finance meeting in Washington, Alistair Darling told the BBC, "The Bank of England has put £15 billion into the financial system.”
“It has made it very clear it is prepared to take whatever action is appropriate to support the financial system in Britain.”
He insisted: "We are prepared to play our part. In turn, what we are saying to banks is you have got to help people as well.”
"If you can pass on those interest rate reductions, if you can help homeowners, help businesses, that will help all of us get through a very difficult time."
Prime Minister Gordon Brown also called on the banks to play their part.
"If the world's largest banks could come together quickly and agree as a group to come clean about the potential bad debts they face, we could reduce the uncertainty and risk they face and restore confidence back into the markets," he said.
Analysts said that Mr Darling’s words were unusually strong, but the Government is unable to compel banks to pass on the full 0.25 per cent cut in rates that the Bank made this month.
The biggest mortgage lenders have pledged to pass on the interest rate cut to customers paying back variable rate loans, although the cost of borrowing is still predicted to rise.
The Chancellor also rejected claims that Britain is heading for the sort of crash in house prices that characterised the 1990s.
"The key thing though is, unlike in the past, our interest rates are a lot lower, and, critically, whereas in the early 1990s you had three or four million people out of work, today unemployment is the lowest it's been since the mid 1970s,” he said.
Remortgage News posted on 21 April 2008
