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Loan funds could be affected by further rate cuts

06/02/09

If the Bank of England decides to cut rates gain this week then this could do more harm than good for home loan funds in the UK. Building societies across the UK have said that a further cut in the base rate could bring more problems for the housing market by reducing the amount of mortgage loans available for those looking for new mortgages.

Home buying in the UK could encounter some serious problems if there is a lack of flow of money from savings resulting in loans for homes being not as widely available.

Director of the Building Societies Association, Adrian Coles commented, “Mortgage availability rather than the cost of mortgages has become a more pressing issue. This suggests that what is important to potential borrowers is maintaining the flow of mortgage funds to the market rather than reducing interest rates further.”