Interest rates 'could be lowered in November' - commercial mortgages

19 September 2008

The Council of Mortgage Lenders (CML) has speculated that the Bank of England may reduce interest rates in the coming months.

Commenting on a number of recent events within global financial markets, the CML concluded that the Bank's monetary policy committee (MPC) may lower the central rate sooner than was previously expected.

It stated: "The MPC may well reduce rates quite sharply next year and the odds have shortened for a cut as soon as November."

A weakening in the labour market may encourage the MPC to make a move, it added.

Any reduction in interest rates could lower the cost of borrowing, including that of commercial mortgages.

Several UK mortgage lenders have merged in the past few weeks - such as Nationwide acquiring the Derbyshire and Cheshire building societies - in a bid to ensure stability for the industry.

Yesterday the Financial Services Authority predicted that Lloyds TSB's takeover of Halifax Bank of Scotland could improve investor confidence.