Rate cut? Lenders may hang on to what they've got

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The Independent Online

It is not 100 per cent certain but the smart money is on an interest rate cut this week.

Not before time, tens of thousands of homeowners will think. It is now plain to see family finances are feeling the pinch like no time since the last recession, with the Royal Institution of Chartered Surveyors becoming the latest voice to warn of a sharp rise in home repossessions.

If the cost of borrowing is reduced this week, will lenders pass it on to homeowners in the form of lower mortgages? The last time the base rate came down, despite one or two inaccurate reports, the vast majority of lenders were as good as gold, dutifully cutting by the same margin as the Bank of England. The Halifax, which had previously developed a habit of waiting a while after a rate move, announced straight away that it would be lowering its standard variable mortgage rate (SVR).

In truth, this wasn't that big a deal for the Halifax's bottom line as only a small fraction of its mortgage customers are on the bank's SVR. But the symbolism was important and other big lenders followed suit.

If the Bank of England cuts this week, don't be surprised to see the Halifax do the same again, though other lenders, with proportionally more customers linked to their SVR, may be less willing to follow the leader. The credit crunch is still on and some will be keen to hold on to as much cash as possible. It is something that will have to be watched closely.

Great timing

Those awful HM Revenue & Customs self-assessment adverts we see each January, featuring Adam Hart- Davis, are a thing of the past. This year we were treated to Mr Hart-Davis slipping down a CGI hourglass – in hindsight, officials might have preferred it to have been a mincer – while telling us not to miss the self-assessment deadline.

But on the big day itself, Mr Hart-Davis blotted his copybook big-style by telling all who would listen that he reckons the UK tax system is way too complex and all personal taxes should be rolled up into a flat income tax.

Putting aside the issue of the merits or otherwise of flat taxation, you can just picture the delight on HMRC officials' faces on receiving a public lecture on how they should manage the tax system from a TV presenter to whom they pay a huge amount of cash to front their campaigns.

This on the same day that officials were explaining why the self-assessment website had crashed for several hours, stopping thousands from filing returns. You couldn't make it up.

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