Savings providers beat mortgage lenders when it comes to interest rate cuts

03 April 2009 / by Rebecca Sargent
Since the base rate was cut to an all time low of 0.5 per cent, almost three quarters of savings providers have cut their interest rates, while just over a quarter of mortgage lenders have done the same.

The analysis from Moneyfacts.co.uk has shown that of the 72% of savings account providers to cut their rates, the majority passed on the entire interest rate cut of 0.5 per cent.

Commenting, Michelle Slade, analyst at Moneyfacts.co.uk, said: "With many accounts already paying extremely low rates even before last month's cut, there was not much further many of the providers could go."

However, Ms Slade added, "many people are predicting that bank base rate has gone as low as it can and savers will be hoping that rates now start to improve.

"We have already seen the first signs of providers offering more competitive deals to savers with the launch of many best buy products in the last month," she added.

Meanwhile, the majority of mortgage lenders have been holding off from interest rate cuts, as just 29 per cent have reduced their standard variable mortgage rates, while only 11 lenders have passed on the full cut.

"With each base rate cut, the number of lenders passing the cut on in full to their SVR continues to dwindle. Many lenders have now cut rates as low as they are prepared to go," Ms Slade said.

"Many of the lenders that passed on this month's cut made no reduction last month, while others have a guarantee to pass on the cut and have no option but to do so."

In fact, according to Moneyfacts.co.uk, despite the fall in base rate, the average tracker mortgage rate jumped from 3.54 per cent at the beginning of March, to 3.62 per cent yesterday.

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