Louise Cuming, head of mortgages at moneysupermarket.com, said that, as so much funding comes from sources such as securitisation and selling off portfolios, the Base Rate decisions were having increasingly little effect on the mortgage market and the pricing of products.
She added that consumers’ obsession with rate movements was out of balance with their effect on product pricing.
She said: “The situation will stabilise as we go back to balance sheet lending and lenders using their own funds. But I don’t think there will ever be a direct correlation between Bank of England rates and lenders’ rates.”
As the government has traditionally used the MPC to control the housing market, Cumings said it would put the government in a dilemma.
This has been seen with Prime Minister Gordon Brown’s calls for lenders to pass on rate cuts, which Cumings believed ‘smacked of desperation’ and was an attempt to ‘crowbar lenders into action’.
She said: “The MPC’s rate decisions are not solely based around the housing market. The effect on the housing market is one spin-off and it’s becoming less pertinent as it will only affect those on a standard variable rate.
"What we’ve failed to recognise before is that it affects a small percentage of the market and we should be concentrating on new customers. People might be waiting unnecessarily for Base Rate announcements, because whatever they do might not be affected by the MPC.”
Alex Murray, group director of mortgages for Thinc, commented: “The majority of lenders now need to look at their prime side for margin. The only way they can do that is not passing on rate cuts.
"Then there are those that are taking from the markets. Rate cuts are more of a feelgood factor rather than having an affect on the overall market and the individual. But I do think we need another rate cut to instil confidence.”
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