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Lenders fail to pass on base rate cut

Mortgage broker London & Country says lenders are short-changing borrowers by not passing on the full 0.25 per cent Bank of England base rate cut which was announced more than two weeks.

The base rate was cut to 3.75 per cent from 4 per cent on February 6 but L&C says many borrowers still do not know how much, if any, of the benefit will be passed on by their lender in cuts to the standard variable rate. None of the top five lenders has passed on the full cut.

Using Council of Mortgage Lender figures, L&C says the top 15 lenders account for around 88 per cent of the mortgage market with outstanding mortgage balances of £520bn.

If all the 15 lenders passed on the full base rate cut, it would save borrowers around £54m but so far they are not getting even half of that.

L&C estimates if people on SVRs voted with their feet and switched to a competitive two-year fixed or discounted mortgage scheme, the nation would be £400m better of each month, almost £5bn a year.

L&C mortgage specialist David Hollingworth says: “There are some fantastic schemes around at the moment, many of which offer help with costs to switch from an existing lender.”

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