Lesbian, gay, bisexual and transgendered (LGBT) home owners, especially those in a relationship, have welcomed the decision of the Bank of England’s Monetary Policy Committee to reduce interest rates by a quarter of one percent.
High levels of LGBT couples retain two properties, living in one and renting out the other.
The buy-to-let market has suffered from stagnating rental prices coupled with rising interest rates. Today’s cut was the first in two years.
In a statement, the Bank of England said: “although output in the United Kingdom has expanded at a brisk pace for the past two years, there are now signs that growth has begun to slow.”
The bank blamed a global problem in the supply of credit to both households and businesses.
British Retail Consortium director general Kevin Hawkins called for further cuts:
“With customers under severe pressure it is only a first step to reviving consumer confidence and will make only a marginal difference to spending this side of Christmas.
“To soften the downturn that is clearly on the way for 2008 and avoid a full blown recession this must be the first of a series of cuts. The sooner the Bank delivers the next one the better.”
While the city and retailers have welcomed the reduction, the knock-on impact on LGBT and other home owners may not be as great as it may seem at first.
Today’s decision would result in just a £16 reduction on a typical £100,000 mortgage.
Traditionally, banks and building societies have passed on reductions in the base rate to borrowers by reducing the cost of variable rate mortgages.
However, due to the credit crunch, the inter-bank lending rates (LIBOR) have risen, so those with standard variable rate mortgages will be unlikely to see any benefit at all.
Ray Boulger, senior technical manager at John Charcol, said: “We will see a majority of lenders either not cutting their SVR at all or not cutting it by the full quarter point.”
Louise Cuming, head of mortgages at Moneysupermarket.com, agreed.
“Lenders will take the opportunity to get better margins,” she said.
“I think they will move but not by the full quarter point. I don’t think anyone will be brave enough to not move at all.”