Leading lenders cut lending rates

Halifax and Nationwide have both reduced their standard rates after the Bank of England cut the base rate from 5.75% to 5.5% last week.

Halifax passed on the full cut to borrowers, reducing its standard variable rate from 7.75% to 7.50%. Nationwide reduced its base mortgage rate from 7.24% to 6.99%.

The director general of the Council of Mortgage Lenders, Michael Coogan, has said that a reduction in interest rates is exactly what the market needs and will benefit consumers. He considers that it will reduce the risk of payment shock for the 1.4 million borrowers coming off fixed rates in the next year.

Other lenders have been slower to make a decision on whether they would be passing on the reduction to borrowers. Most of the major banks have said their mortgage rates are currently ‘under review’.

Industry analysts had predicted that mortgage lenders would pass on only part of the rate cut, or none at all.