BSA: New base rate could re-energise mortgage market

The Bank of England's base rate reduction could lead to the re-energising of the mortgage markets, according to one industry group.

An official from the Building Societies Association (BSA) believes that the monetary policy committee's decision to cut the base rate by 1.5% to 3% will bring support to the housing market.

Adrian Coles, director-general of the BSA, said: "The outlook for the economy has deteriorated considerably in recent months; activity in the housing market has stalled and house prices have fallen."

"This reduction in the Bank rate will provide some support to the housing market and especially borrowers on tracker rates."

However, the BSA was quick to point out that the interest rate was just one of a number of factors the financial firms had to consider when lending to individuals and businesses.

A recent investigation by R3 - the trade body for insolvency - discovered that bankruptcy could hit 42% of small firms by the end of next year.