In March, the central bank made two significant and largely unexpected emergency cuts to its Bank Base Rate, taking it from 0.75 per cent to the all time low of 0.1 per cent.
As a result, vast numbers of tracker rate mortgages were removed from the market and the bank subsequently warned lenders that it would closely monitor how the rates were passed on to borrowers.
In the minutes of its latest meeting, which were published today, the bank’s Monetary Policy Committee (MPC) highlighted that it had been watching the situation and suggested lenders were slow to adjust their offerings to reflect the reduction.
“The committee continued to monitor the pass-through of its recent 65 basis point reduction in Bank Rate,” the MPC said.
“Pass-through of the reductions in Bank Rate to new mortgage rates had been slower than expected to date. That might reflect lags in transmission or other more enduring factors.
“Effective rates on the stock of standard variable rate and tracker mortgages had fallen by 54 basis points and 57 basis points respectively between February and April,” it added.