Nearly a fortnight after the Bank of England's monetary policy committee (MPC) lowered interest rates by a quarter point, less than half of UK mortgage lenders have passed on rate cuts to their customers, says Moneyfacts.
Of the 120 UK mortgage lenders only 58 have passed on a reduction to customers since the Bank lowered rates, despite numerous calls from the Council of Mortgage Lenders for interest rates to be lowered to help stimulate a stagnating market.
Those that have already passed on the rate cut to their customers include Halifax, Intelligent Finance and Abbey.
Rachel Thrussell head of savings at Moneyfacts says: ”We are still waiting for the majority of institutions to make their decisions following the MPC rate cut. Historically this is the pattern we expected to see, with the high street banks reacting one to two weeks after the decision and many of the mutuals making their changes around the first of the following month, once they have obtained board approval. Those institutions offering rate guarantee products will make their changes in line with the timescale detailed in the terms and conditions of these accounts – usually between 14 and 30 days from change of base rate.”
But David Hollingworth, mortgage specialist at L&C, says: "We have seen this haoppen before in the past where there has been a lag of a month or two by the lenders. I think lenders will make a cut in their rates but most will not pass on the full 0.25% cut to their customers.
"Any way you look it at, if the ledners do not pass on the cut it would be very disappointing but more and more people are on base rate trackers today and les people are on SVRs or discount products. Really for the base rate cut to become a stimulus for the market the lenders have to be passing on the cut in rates to the borrower."
Meanwhile the minutes of the last meeting of the MPC released this morning reveal a close vote with the governor of the Bank of England voting against a cut in the base rate. Mervyn King, Rachel Lomax, Sir Andrew Large and Paul Tucker all voted to maintain interest rates at 4.75%.
The minutes of the meeting suggest another cut in interest rates soon is unlikely given: "the Committee’s latest projections did not support the current market view that a sequence of interest rate cuts was likely to be needed to meet the [government's]inflation target in the medium term."
For those in favour of lowering rates it was felt: "A failure to reduce rates now might damage confidence. Early action would reduce the risk that greater changes in the policy rate would be needed at some point and would not preclude a rise in rates in the future if the data warranted it." The minutes also state: "there was no presumption on the future direction of interest rates."
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