Some lenders have taken the initiative and reduced rates, after the Bank failed to implement its own reduction to the base rate of interest.
Firms working in the mortgage sector have reacted negatively to yesterday's interest rate decision from the Bank of England.
The Bank's nine-member Monetary Policy Committee decided yesterday to keep rates at five per cent, despite the continuing credit crunch-induced slowdown in the UK housing market. It is thought that concern over rising prices - which has seen the government's inflation benchmark rise to 3.3 per cent - prevented the Bank from making the cut.
Commenting, Duncan Samuel at online conveyancers Convex.net said that the decision will "not provide any solace" to buyers, particularly those who did not yet own property. He added: "Although asking prices are coming down, mortgage rates are at an eight-year high…the Bank of England seems to be adopting a 'wait and see' approach in the wake of rising inflation and worsening economic conditions, so I can see the rate being held in the coming months."
Meanwhile, Britain's large mortgage lenders have issued a clear signal that they are willing to take the initiative if the Bank does not cut rates, by making their own rate reductions to mortgage deals in recent days in a bid to attract new business and stimulate the market once more.
Following moves by Nationwide and HSBC to reduce some of their tracker deals earlier this week, Abbey said today that it would be cutting 0.15 per cent from its two and three year fixed rates for Monday, and also introducing a new three-year deal at 5.99 per cent.
Phil Cliff, Abbey's director of mortgages, commented: "Abbey is committed to offering competitive deals and our strength in the mortgage market allows us to do this. These rate reductions are the second set that Abbey has made in just ten days."
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