"WHILE lower mortgage rates provide borrowers with the opportunity to repay their mortgage debt more quickly to reduce the term, lower savings rates impact lenders' ability to attract deposits and maintain the flow of mortgage lending in 2009. The market is still not functioning properly and is likely to lead to a fragmented approach by lenders, as they try to balance the interests of savers and borrowers and other pressures on their businesses, in responding to today's announcement.
Michael Coogan, director general of the Council of Mortgage Lenders, on Thursday's base rate cut to 1.5 per cent. "We expect suppliers to take a cautious approach to bringing household energy prices down. They will be concerned
that wholesale prices could move upwards again, eating into margins and leaving them exposed. To mitigate this risk, they are likely to opt to introduce cuts in two stages, making an initial reduction of 10–15 per cent in the run up to spring 2009, followed by a second cut of a similar or smaller level later on in the year if wholesale prices remain low."
Will Marples, energy expert at uSwitch.com "Scotland is certainly feeling the full effects of the credit crunch, with the worst results on record in the 11 years of the Lloyds TSB Scotland Business Monitor. The Scottish economy is in the midst of a severe slowdown which has yet to bottom out. Recession beckons for the Scottish economy."
Professor Donald MacRae, chief economist at Lloyds TSB Scotland"The FSA needs to urgently get to grips with consumers' concerns about the security of their money. Instead of stalling, the FSA needs to find a way to tackle the problems caused by temporary high balances and per-institution payouts. It is difficult to justify the instances in which consumers' deposits are not protected."
Which? personal finance campaigner Tori Watson on proposed changes to the Financial Services Compensation Scheme
