Abbey and Bradford & Bingley have announced they will pass on the full 1.5% cut in base rates to their variable rate customers.
Other mortgage lenders have come under intense pressure to announce their own rate cuts, with the Government and the media calling for them to pass the savings on to borrowers.
Abbey says it will reduce rates for all variable rate customers by 1.5% following the Bank of England’s historic rate cut. Lloyds TSB announced it would pass on any savings prior to the central bank’s announcement.
B&B said it will cut rates for all customers on its product variable rate (PVR) and says 90% of its customers are on mortgages linked to this rate, or fixed rate products that revert to PVR.
However, the reluctance of other banks and building societies to announce their intentions, and a warning from the Council of Mortgage Lenders (CML) that customers may not immediately see a 1.5% reduction in their own mortgage rates, has led to public outcry.
Last night, Chancellor Alistair Darling called for lenders to pass the cut on to borrowers to help stimulate the economy.
“All of us need to play our part,” he said, “and what is crucially important is that those interest rate cuts get fed through into lower mortgage rates.”
Darling refused to be drawn on whether the Government might force those banks it part owns to cut their variable rates.
The CML has defended its members, saying the costs of financing mortgages are not directly related to base rates and claims the price of inter-bank lending remains relatively high.
Michael Coogan, director general of the CML, says he expects lenders to announce their decisions in the coming weeks once they have a clear idea of how the rate cut is affecting wholesale funding costs.
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