Pushing a piece of string...

There's a great article in The Telegraph entitled "Borrowers taking out popular mortgages paying highest rates in seven years", which does pretty much what it says on the tin.

My favourite nuggets are these:

Lloyds TSB yesterday released its new products and borrowers must now pay up to 2.09 per cent more than the Bank of England base rate for a mortgage. Before last week's [1.5%] cut in the base rate, Lloyds was charging home owners 1.09 per cent above the official rate.

Abbey and Alliance & Leicester have also increased profit margins and now charge up to 2.04 per cent above the base rate. Mortgage experts say that until a month ago, the best deals allowed borrowers to pay just 0.5 percentage points more than the base rate, the average is now 2.34 percentage points above base rate.

To cut a long story, very few people will benefit from the base rate cut, and if they do, not by much. Whereas savers will no doubt be clobbered. Household spending power will henceforth be even lower.

H/t SoldOut at HPC.

"Pass on rate cuts, MPs tell banks"

From Planet Zog:

The Bank of England's monetary policy committee has been urged by a group of more than 20 MPs to cut interest rates when it meets on Thursday. They have also tabled a motion in parliament urging all UK banks to pass on benefits to customers.

Meanwhile, in the real world:

Abbey is increasing rates on its two and three year tracker mortgages, which automatically move up and down in line with the Bank of England base rate, for new borrowers by up to 0.5%. The move comes as the Monetary Policy Committee is widely expected to cut interest rates by at least 0.5% on Thursday... The group's decision to increase its rates for new customers will effectively cancel out a 0.5% cut...