Brown vows steps to pass on rate cuts

LONDON (Reuters) - Prime Minister Gordon Brown has promised new measures to ensure that Bank of England interest rate cuts are passed on to mortgage holders.

A global lending squeeze has made it harder for banks to raise funds on financial markets, forcing mortgage lenders to toughen up their loan terms and raising the risk of a sharp housing market downturn and economic slowdown in Britain.

"Although the Bank of England has cut rates in recent months, the banks have not always been passing those reductions to their customers," Brown said in an article for Sunday's News of the World tabloid newspaper.

He said Chancellor Alistair Darling will be meeting with the main mortgage lenders to discuss what further steps can be taken.

Brown, whose comments were released on Saturday by the newspaper, promised "new measures to ensure those lower interest rates are passed on to mortgage holders."

On Friday, mortgage lenders called on the "cautious and slow" Bank of England to increase efforts immediately to ease the credit crunch, warning of a danger of home loans halving from last year's levels.

"There is a real and immediate need for broader-based action than we have seen to date," Steven Crawshaw, chairman of the Council of Mortgage Lenders (CML), said in a speech in London.

The BoE has made funds available to try and ease the crunch and has cut interest rates three times since December, but policymakers are wary of rescuing financial institutions from the consequences of their own investment decisions.

Brown wrote: "The Bank of England is injecting an additional 15 billion pounds. We need to do more to see this feed through to improved availability of mortgage lending," he wrote.