Debtors could be helped by reductions in mortgage rates, following the convergence of Libor – the rate at which banks lend to each other – and the base rate, it has been suggested.
According to Hannah-Mercedes Skenfield of price comparison site moneysupermarket.com, the recent changes in market conditions could signal a return to a “pre-crunch” situation.
She added that if Libor falls below the Bank of England’s base rate, resulting in cheaper interbank lending, the public “should reap the benefits of reduced mortgage rates” – in theory.
Ms Skenfield further noted that consumers could still “be forced to pay through the nose for credit of any kind”, despite the fact that banks are no longer able to use elevated Libor rates as a reason for maintaining “artificially high” mortgage prices.
Earlier this month, the chief executive of Firstrung, Paul Holmes, branded current mortgage rates – which can be more than ten times the Bank’s base rate – as “obscene”.
By Sarah Adie