Yes it will be passed on and effect the Libor rate - I work for a large high street bank and we are cutting our rates by 0.5% to existing customers effective from the end of May.

Hi Richard

You work for a High Street bank and this bank is cutting mortgage rates by .5%?

Now that IS interesting!

Obvious question, but which bank?

cheers

So, it WAS 0.5%, no big surprise there then.

This is one of the best quotes I've seen in terms of where next and why:

Andrew Smith, chief economist at KPMG, said: "The medicine may not get through to the patient. Even if money market rates fall in tandem, which is questionable, the cut may not be reflected in mortgage and commercial loan rates as lenders seek to expand margins and reduce credit supply.

"With the impact of monetary policy now blunted, rates will ultimately have to fall further to achieve the same result. Rates are heading to 4pc over the next 12 months."

cheers

I guess it is good if lenders can expand their margins because if they are able to do this their appetite (and ability) for lending can increase. It doesn't feel right but it is probably healthy if bank margins increase and their lending ratios become less aggressive.

Whether mortgage rates are 5.5% or 7.25% is not particularly significant in the sense that this is not the factor that could cause the property market to significantly reduce. The real issue is if there is enough lending capacity by the banks to prop up the property market. The BoE needs to be able to provide more liquidity to banks but to able to have regulatory control over these banks lending ratios.

Bloody hell Richard, I hope you don't have a say in the bank's view of the future?! Presumably not or it would have stopped lending altogether by now.
Huw

Come on Richard!

You can't leave us all dangling....when will libor come down then as a result of the last base cut (it hasn't yet!) and which bank will cut rates by 0.5% from the end of May?

cheers

Robin - are you trying to incite another run on a bank?!!!

The Fed reduced rates to 2% on 1st of May.

The Dollar has strengthened against the Euro and the pound has picked up against the Euro to trade 1.28 Euros against the pound (against a low of 1.24).

The bank of England says 'cheer up - its not so bad' - apparently the bank's backing for high grade mortgage backed assets is helping to reduce the sterling Libor rates.

Looks like the worse really is over?

Only, the recover looks long and tough as the UK economy weens itself off a diet of unsustainably high credit.

It isn't going to get worse - but don't expect things to improve quickly is my reading.

Thoughts?

Cheers
Neil

yes, my reading too. several conflicting forces at play in the mean time: stoked up fear, particularly among smaller players, which traditionally overshoots teh original stimulus / pent up demand from many who have wanted/needed to purchase but been scared off until now / (where i'm based in london) rising rents and increasing numbers of continental buyers with their fancy euros / media editors, who may feel that there's is dependable mileage in further doom-mongering, or who may get bored and look for a new green shoots of recovery angle.

but i'm still intrigued to hear who richard's employer is (see previous posts). they deserve applause for patriotically passing on a half a point cut to hard-pressed borrowers. can i ask if they are also expanding their international loan book in bargain basement hungary?

regards,
dan

The banking crisis may be coming to an end but the impact on the real economy has yet to be seen.

I work in construction and things are starting to look very bad for the UK's biggest industry. Work in progress should keep things going for a while but the schemes that should be starting in around 12months are being bined in huge numbers.

Commercial schemes are dead in the water and the public sector boom is sure to end soon.