Banks 'should pass on lower rates to borrowers' - buy to let mortgages

21 October 2008

Banks must pass on lower prices to customers in order to benefit the property market, it has been claimed.

Darren Cook from Moneyfacts has urged lenders to make mortgages more affordable for borrowers in light of the Bank of England's base rate cut and a fall in the London Interbank Offered Rate (Libor).

Libor is the rate of interest at which banks borrow from each other, which can affect the cost of loans - including buy to let mortgages.

Mr Cook stated: "The cost of finance to the banks looks like it is becoming cheaper now ... they need to pass that onto the consumer."

He added that some lenders have so far been unable to pass on the base rate cut of 0.5 per cent to customers due to difficulties in the money markets.

However, the drop in the Libor rate should alleviate some of the pressure on banks.

This figure fell from 6.16 per cent to 6.11635 per cent on October 20th, according to the British Bankers Association.