Lenders follow Bank of England base rate cut

Permalink: Lenders follow Bank of England base rate cut
by Kay Murchie

Following the Bank of England’s Monetary Policy Committee (MPC) meeting yesterday, interest rates were lowered 5.25% to 5%, as widely expected by economists.

Barclays, first direct, HBOS, Lloyds TSB and Nationwide have all announced their intention to reduce their standard variable mortgage rates.

Internet bank first direct has cut its standard variable mortgage rate by 0.25% from 10 April 2008, meaning its customers will benefit immediately from the base rate reduction.

Last week, first direct announced it had temporarily withdrawn all its mortgage products as it tries to clear a backlog of customer applications. The lender said it will not return to the market until what it is labelling an ‘unprecedented number of applications for its home loans‘ has been cleared.

The bank continues to offer its mortgage products to existing first direct customers, regardless of whether they have a mortgage with the bank. It is expected to reopen its doors to new customers again in the coming weeks.

Nationwide said it will reduce its rates from 1 May 2008.

The six million homeowners who have a tracker mortgage are the most likely to benefit from the interest rate cut as they move in line with the base rate. Those with a £200,000 mortgage will save over £30 a month.