Lenders including Skipton Building Society and Lloyds have already pledged to pass on the cut in full to customers on variable rate mortgages.
Brian Murphy, head of lending at broker Mortgage Advice Bureau commented on the decision:
“With this sixth consecutive base rate cut and the prospect of quantitative easing, it appears that the MPC has conceded that it will take more than base rate reductions to kick start the ailing economy. While printing additional money aims to maintain inflation and subsequently prevent the UK from falling into deflation, banks will be under pressure to act in the best interests of the consumer and return to a lending level similar to that of the past if the economy is to move again.
“As this month’s 0.5 per cent cut has edged the base rate ever closer to 0 per cent, borrowers on tracker mortgages with no cap are increasingly reaping the benefits. The borrowers who will find themselves struggling however, are those tied in to high loan to value fixed-rate mortgages due to lack of product options. While the rates on some SVRs are manageable, many of these borrowers will have no choice but to sit tight on these rates due to an inability to source reasonable alternative mortgage deals.”
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