CML director general Michael Coogan commented: "While borrowers on tracker rates will welcome the rate cut, it is doubtful whether it will create the conditions to achieve significantly more new lending. It will not be a surprise if banks and building societies try to prioritise savers in this very low interest rate environment. For borrowers who remain in employment, affordability is unlikely to be an issue at the moment.
"But, if the rate cut helps businesses, and therefore helps to keep people employed, this will at least help to cushion the impact of the recession on the housing and mortgage markets. In practice, rate cuts alone will not achieve this objective as they have become a more blunt instrument- they are only one of the tools being used to try to help the UK weather the recession."
