Base rate cut may not be passed on

Even if the Bank of England's Monetary Policy Committee (MPC) chooses to cut the base rate of interest today (January 10th) mortgage holders may not see the benefits.

That is according to the Council of Mortgage Lenders (CML), which said that there are more factors than just the base rate which affect mortgage repayments.

Some lenders did not pass on December's 0.25 percentage point rate cut to borrowers and the CML pointed out that further cuts may also not be passed on.

"The factors that determine lenders' rate-setting policies are more complex than simply the level of the bank base rate," read a CML statement.

"Lenders must have regard to their own cost of funding from savers, and also from wholesale sources (where Libor [London Interbank Offered Rate] is a more relevant indicator of cost than the bank base rate), and the level of margin they are seeking to achieve, as well as their view of how rates may move in the future and how this may affect future pricing," it added.

Opinion is split as to whether or not the MPC will cut rates today.

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