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BSA discourages interest rate cut

BSA discourages interest rate cut

Category: Economy

Updated: 03/03/2009
First Published: 03/03/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Building Societies Association has said that a Bank of England decision to cut interest rates again this week would be bad news for almost everybody connected with the savings and mortgage markets.

The Monetary Policy Committee will make a decision this week but the BSA believes a further reduction would be bad news for savers, borrowers and institutions alike.

It said that banks and building societies would find it difficult to lend more money because of the increasing low interest rate, while customers would see cuts in the amount of products available, such as mortgages and unsecured loans.

"If the Bank of England wishes to make a contribution to a recovery in the housing and mortgage markets, it should not cut interest rates this month," said Adrian Coles, director general.

"We need to encourage an increase in the flow of funds into the mortgage market, not take steps that would further restrict that flow."

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