Three quarters of UK mortgage lenders yet to pass on 0.5% rate cut

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by Kay Murchie

According to financial information provider, Moneyfacts, last month’s 0.5% interest rate cut has yet to be passed on by three quarters of UK mortgage lenders.

The Bank of England’s Governor and the Prime Minister both admitted last week that the UK is heading for a recession so further cuts in interest rates are expected.

However, Darren Cook of Moneyfacts, explains that further rate cuts could have little or no impact on the majority of current household’s mortgage outgoings and could ultimately result in an increase in repossessions.

According to Moneyfacts, of the 96 lenders offering standard variable rate (SVR) mortgages, less than 50% have implemented cuts for homeowners.

However, some have responded including the Halifax, who cut its SVR for new customers by 0.5%, as did the Northern Ireland-based, Northern Bank.

A spokesperson for Which?, the consumer organisation, said banks are having their cake and eating it and is urging the Government to persuade companies to lower rates.

HSBC, Britain’s eighth-largest lender, cut saver rates on 16 October by 0.49% - 8 days after the rate cut, however, Moneyfacts highlights that it has yet to reduce variable mortgage payments.

Meanwhile, the Skipton Building Society has opted to leave its SVR unchanged despite lowering interest rates on some of its savings accounts by 0.5% last week. Other lenders to opt for this method include the West Bromwich Building Society, the Manchester Building Society, the Mansfield Building Society and the Ipswich Building Society.

Ray Boulger, of mortgage broker Charcol, explains that the current uncertainty means that some lenders have held back, particularly since the rate at which banks lend to each other has not yet fallen enough to make a difference.

Mr Boulger believes things will be different next month and advises consumers to wait a few days, if possible, before shopping around.