Rate cut trickles into mortgage market

7 November 2008 3:50 pm

Yesterday, Lloyds TSB promised that its mortgages, and the mortgages of Cheltenham & Gloucester would pass on the full rate cut onto their variable rates, their existing tracker rates and flexible rates.

Abbey quickly followed suit and now Halifax, RBS, Northern Rock and Nationwide have agreed to pass on the 1.5 per cent.

Today the Prime Minister and the Chancellor called the chief executives of the high street banks to Downing Street in an attempt to cajole them into passing on the shock rate cut.

Gordon Brown says: “We are determined not only that the interest rate cuts are passed through, we’re also determined that lending resumes so that homeowners looking for mortgages, small businesses looking for cash flow and families looking for the normal practices of banking to help them as they go through their lives, is properly resumed by the banking system.”

Although most existing mortgage holders will benefit from a 1.5 per cent drop, those looking to get a new mortgage will not be so lucky: today almost every tracker mortgage was pulled from the market as lenders look to balance the base rate cut with high Libor rates.

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