Comments on Bank of England’s interest rate decision

Conditions in the mainstream mortgage market are "rapidly deteriorating", negating the Bank of England’s interest rate cuts and leaving many Scottish first-time buyers with limited lending options and higher mortgage rates, an expert has warned.

Commenting on the Bank’s decision to cut interest rates to 5.25 per cent, Ray Boulger, of independent mortgage adviser John Charcol, said the benefits of the reduction would be outstripped by the effects of the credit crunch.

This, he said, was prompting lenders to change their prices and lending criteria at the "fastest pace in living memory".

As a result, those looking to buy a house in Scotland could face new mortgage rates that are actually higher than when interest rates stood at 5.75 per cent.

Furthermore, Mr Boulger commented, tighter criteria for mortgages could mean that Scottish first-time buyers’ lending expectations "cannot be achieved".

He also advised those looking to remortgage their property to start investigating the available deals "six or seven months" before their current deal ends, as most mortgage deals are limited to a six-month period.

Following the interest rate cut, the Royal Institution of Chartered Surveyors warned that the property market is "continuing to weaken".