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Lenders hold back on full rate cuts

  • 28/07/2003
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While this month's Bank of England base rate change was not unexpected it has not been universally w...

While this month’s Bank of England base rate change was not unexpected it has not been universally welcomed in the mortgage market, and not all lenders have passed on the full rate cut to borrowers.

Those that have decided to pass on the full 0.25% cut in base rates include Abbey National, Bristol & West, Cheltenham & Gloucester, C&G Mortgage Direct, Darlington Building Society, Lloyds TSB Scotland, Mortgage Express, Sainsburys Bank, The One Account and The Woolwich.

However in a market where new borrowers on a discount are subsidised by those borrowers on a standard variable rate, not all were happy.

John Goodfellow, chief executive of Skipton Building Society and chairman of the Building Societies Association, said: ‘I do not think the housing market needed the cut and I suspect that the cost of borrowing has got as low as it needs to be. Another 0.25% does not make much sense to me in terms of the housing market. There may be other bits of the economy that will benefit from this but the market is not short of activity or desperate to lend.’

Of those not passing on the total 0.25% base rate cut, the Royal Bank of Scotland has cut its standard variable rate by 0.23%, Skipton Building Society by 0.21% and Northern Rock by 0.2%.

Intelligent Finance and Leeds & Holbeck Building Society have both announced cuts of 0.16%, while Egg and the Halifax have cut their standard variable rates by 0.15%. HSBC has decided to pass on 0.11% to borrowers, and Nationwide and the Yorkshire Building Society have decided on a cut of 0.1%.


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