I’m not superstitious, but if I was Gordon Brown I wouldn’t take much comfort in tonight’s figure for the one-month LIBOR interbank interest rate. It’s an ominous 6.66% - having fallen just 0.09 percentage points since the 25-point cut in Bank of England base rate. The more important three-month LIBOR is down a paltry 3 points to 6.61%. This is the market bank rate which will affect our mortgages: it is what matters. And its not going anywhere fast. Ray Boulger from John Charcol has just talked me through it. Most mortgage lenders are just ignoring the BoE rate cut, he says. Egg has today cut its Standard Variable Rate by just 15 points, but even that's generous compared to the deafening silence from Bristol & West and the building societies (Nottingham, Skipton etc).
The lever which the BoE once used to yank down our mortgages and stimulate spending is broken. Brown gave “independence” to a Bank of England which is losing control of UK interest rates. Just a quarter of today's mortgages are directly linked to BoE base rate, says Boulger. Brown’s mission now is to pretend he’s in control.
PS Ian King in The Sun gets it right.