Conditions for new mortgage borrowers are unlikely to ease even though interest rates have hit an all-time low, as expected property price falls maintain banks’ reluctance to lend.

Brokers said until the supply of mortgages improved, yesterday’s rate cut would do little to lower the cost of lending for first-time buyers or those looking to switch to a new deal.

The latest cut, which brings the Bank rate to 1.5%, is also a blow for savers as most providers are expected to reduce saving rates by the full half a percentage point.

Lenders are expected to reprice their new tracker mortgage rates at a higher margin above base, effectively wiping out the benefit of the cut for new borrowers.

Financial Times