Lenders pass on interest rate cuts to mortgage holders

10 November 2008

Despite an initial reluctance from the UK`s major lenders, the majority have now passed on the recent interest rate cut to their customers.

There were fears that the 1.5 per cent fall in the base rate, which was announced last week by the Bank of England`s monetary policy committee, would not be translated into better deals for consumers.

However, in a meeting, chancellor Alistair Darling put pressure on the leaders of the country`s major banks, and several leading lenders have since announced cuts to their mortgage rates.

Lloyds TSB, Abbey, the Royal Bank of Scotland and HBOS were among those who revealed they would be passing on the reductions in full to customers with variable mortgages.

The news may be welcomed by consumers who are falling into arrears with their home loans and who are facing the threat of repossession.

According to figures produced recently by the Financial Services Authority, the number of homes being repossessed in Britain rose by 71 per cent during the second quarter of this year.

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