Banks and direct lenders have not yet responded to the latest cut in bank base rates. After all, it was not long ago that economists were predicting the next rate rise would be up. With more cuts now forecast, they are likely to wait a while before making a positive move.

Their inertia is fuelled by news that consumer spending is continuing to rise and personal debt is growing. In such a market there is little need to reduce margins further, so long as rivals do not make the first move.

The position of the direct lenders contrasts with the carmakers who have cut rates, primarily to take advantage of the prime selling period through the third quarter of the year. As a result, franchised dealers find themselves in a competitive position and could start to roll back some of the market share gains made by banks in the past few months.

Despite the temporary pause in rate cuts, direct lenders will be pushing hard for motor loans business through September and into October when the emphasis will switch back to used vehicles. Typical moves include a broad band of loan rates (Alliance & Leicester now offers 9.5% from £5,000 to more than £11,000) and 'repayment holidays'.