Brokers have questioned the benefit of the Bank of England base rate cut to borrowers as new data confirms many lenders raised their rates just before the cut, while fewer than half have passed on the reduction to SVR customers.
Last week Moneyfacts said several lenders raised their rates ahead of the 4 August Bank decision, including Santander, Nationwide and Halifax.
Moneyfacts finance expert Charlotte Nelson says: “The average two-year tracker rate has been reduced by 0.19 per cent. However, shockingly, some providers, preempting the announcement, chose to increase their variable rate products, meaning the reductions have been offset.”
Bank governor Mark Carney said lenders had “no excuse” not to pass the cut onto borrowers.
Chadney Bulgin mortgage partner Jonathan Clark says: “Although there were clear indications that the Monetary Policy Committee were going to drop rates, I was disappointed to see lenders increase tracker rate margins in the week before the announcement.
“This, coupled with many of them dragging their feet when it came to adjusting their SVRs means that many borrowers will simply not feel the benefit of a little more cash in their pockets, as Mark Carney and his colleagues intended.”
Your Mortgage Decisions director Dominik Lipnicki says: “This is why people lose faith in lenders and I am not surprised to see that’s happened.”
But others defended lenders’ actions. London Money director Martin Stewart says: “They have been hammered enough by low base rates. I don’t think it is up to anyone to tell a bank how to price money.”