Hours before the widley anticpated move by the Bank of England to lower interest rates to 5% (down .25% from 5.25%) two leading banks raised interest rates on their mortgage products.
Nationwide building society and Alliance & Leicester increased the cost for their borrowers as the Bank of England tried to lower rates to protect the UK economy, undermining the Bank of England's control on Mortgage rates. Although the Nationwide did also reduce the rate on some of it's mortgages today as well.
Tim Fletcher of financial analysts Baseline Capital said: 'Today's decision is irrelevant as far as pricing for mortgage borrowers is concerned.
'The Bank has effectively lost control of retail interest rates, which have become decoupled from the base rate.
'Any change in the Base Rate is likely to have little or no impact on the cost of raising funds for lenders.
'Together with the need to control demand this cost will continue to dominate retail lenders' pricing decisions.'
Such moves could leave a lot of people suffering twice after today - with banks not passing on rate cuts, or even increasing rates, for mortgages whilst others will reduce interest paid on savings accounts.
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