CML: decision to reduce rates to 5%

Responding to today's MPC decision to reduce the base rate to 5%, the Council of Mortgage Lenders welcomes the move which, if partnered with increased provisions of liquidity, could help to begin to restore stability to the mortgage market.

Michael Coogan, CML director general, commented: "This is good news for those borrowers with mortgages tracking the Bank base rate.

"But in these dysfunctional market conditions, the base rate is not in itself a good guide to the cost or availability of funds to lenders.

"To improve the market in which lenders are operating and restore consumer confidence, the Bank needs to coordinate successive base rate cuts with further injections of more widely available liquidity.

"We would like to see another base rate cut next month partnered with more liquidity auctions, of higher amounts, over longer terms, and available to a wider range of institutions. This coordinated approach would help to show the authorities are serious about tackling the market problems."