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Interest rates will not affect mortgage market, says Firstrung

Interest rates will not affect the mortgage market because it is "completely detached" from the Bank of England base rate, mortgage broker Firstrung has said. The Bank of England base rate is currently at 5.75 per cent, but recent research from mortgage website found that the most common standard variable rate among lenders is 7.74 per cent - a difference of almost two per cent.Firstrung's chief executive Paul Holmes said a fall in the base rate in the coming months would have little impact on the mortgage market: "The lenders are completely detached - the Bank of England might lower rates tomorrow, but the lenders would say: 'That's fine, but we still need to make a profit.'" He added: "What the mortgage industry needs now is not extra complicated products, it needs some rationalisation. It needs a huge shake up, and the pain's going to be quite severe. "You're looking at some brokers saying at the moment that their business is down 45-50 per cent, which, in reality, is a figure which most of the industry should be looking at - a 50 per cent contraction and consolidation of the mortgage business."

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