From the usual sources:
The Monetary Policy Committee cut its base rate from 5.25 per cent to 5 per cent amid growing concern about slowing growth in the economy.
But some lenders increased the rates on some of their loans hours before the announcement. Yesterday morning, Nationwide – the biggest building society – and Alliance & Leicester said they were increasing rates on their new fixed-rate mortgages. Woolwich made a similar move this week.
Other lenders are expected to follow suit. This is because the interest rates banks charge each other to borrow money have not matched recent cuts in the Bank\’s base rate.
It\’s actually more basic than that. The authorities do not control anything other than that Bank base rate. All other interest rates can be influenced by that rate, to be sure, but the influence lessens the longer term the loan: and mortgages are, almost by definition, the longest (or almost the longest) term loans in the market.
It\’s always been true this, it\’s just we\’re seeing at the moment that the influence is less than usual.
But, whatever the truth of this, we\’ll have articles around the place insisting that this is just the bastard banks profiteering off the backs of the borrowers.