Mortgage providers Abbey, Nationwide, Halifax and Skipton Building Society have followed in the footsteps of Lloyds TSB by vowing to pass on the 0.5 per cent interest rate cut to their mortgage customers.
The Bank of England's Monetary Policy Committee (MPC) chose yesterday to cut the interest rate to just one per cent – the lowest since records began. Since then a number of mortgage providers have announced that they will pass the full cut on to their mortgage
Nationwide's Base Mortgage Rate will fall from three per cent to 3.5 per cent on March 1, and those who took out a tracker mortgage
before December 1 2008 will also see the full rate cut. Abbey
has also vowed to pass on the full rate cut to tracker mortgage holders, while its Standard Variable Rate (SVR) is under review.
Other mortgage lenders to make the changes include Skipton Building Society whose SVR will fall to four per cent and Halifax
whose SVR will also fall to four per cent, while the full 0.5 per cent will be passed on to its tracker mortgage holders.
However, as mortgage rates
are reviewed, so too are savings account
rates which have been quick to fall since the base rate began its decline. Both Skipton BS and Abbey have formerly announced that their savings rates are under review.
For many experts, the negative effects of the base rate cuts on savers is outweighing the positive for tracker and SVR mortgage holders. Commenting, Kevin Mountford, head of banking at moneysupermarket.com said:
"We are now getting dangerously close to the point where people will say it's just not worth saving.
"Anyone who has made sensible savings over the years is being penalised for their prudence. And it is those who rely on savings for regular income that are suffering the most."
Head of mortgages at moneysupermarket.com, Louise Cuming added: "While this is great news for some borrowers, it will hit those looking for new deals very hard. Lenders will have to replenish their coffers from somewhere and I expect the next breed of tracker rates will come with wider differentials above the Bank of England rate and hefty fees."
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