Banks 'not passing on rate cut'

05/12/2008

Mortgage lenders are under pressure to pass on the latest Bank of England rate cut.

The Bank lowered its lending rate to two per cent yesterday, down from three per cent.

Worries over the possibility that the UK might face a sharp recession have caused the move.

This is because cuts to the Bank's interest rate are generally passed on by mortgage providers, which in turn leads to cheaper loan repayments for customers.

However, lenders are themselves under financial pressure due to the credit crunch - and some are seemingly resistant to passing on the latest cut.

For example, HBOS has said that its own mortgage rates will be cut by just 0.25 per cent.

HSBC and Lloyds TSB are among the banks who are to pass on the full cut.

Speaking to the BBC, prime minister Gordon Brown said: "If the banks pass the interest rate reduction on, and I hope and believe that they should do so, then it's of benefit to homeowners and businesses right across the country."

Tags; Housing Debt and Bills, Young Family Finances,

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