Lloyds and Skipton vow to pass interest rate cut on to mortgage holders

05 March 2009 / by Rebecca Sargent
As speculation grows over another cut in interest rates today, Skipton Building Society, Lloyds TSB and its mortgage arm Cheltenham and Gloucester (C&G) have all vowed to pass on any cut to its existing mortgage customers.

Those with a Lloyds tracker and variable rate mortgage will benefit as its standard variable rate, which is currently three per cent, will fall accordingly, and its tracker mortgage has no collar meaning the rate could fall as low as zero.

Since base rate began to fall back in December 2007, Lloyds and C&G tracker and variable rate mortgage customers have seen their interest rates fall by the full 4.75 per cent.

The total reductions, according to Lloyds mortgages, represent a monthly saving of more than £420. A further 0.5 per cent cut would save a further £38 a month.

Stephen Noakes, C&G commercial director said: "There are differing views on what action the Bank of England will take tomorrow and a rate cut is not a dead cert. If base rate does fall, we will pass it on to tracker and variable customers, who are already hundreds of pounds a month better off."

Commenting on Skipton mortgage's pledge to pass the cut on through its standard variable rate, chief executive David Cutter said: "We have pledged our residential SVR will never be more than three per cent above base rate and, even with this is at its lowest level for 315 years, we will honour our promise. This means approximately 15,000 Skipton borrowers will have a bit more money to spend as their monthly payments reduce."

The announcement from Lloyds comes just after the bank passed on the last interest rate cut of 0.5 per cent - it announced in February that its tracker and variable rate mortgage customers would benefit from the last rate cut from March 1.

Despite the interest rate cuts, rumours are rife that the Bank of England will soon start injecting more cash into the economy through quantitative easing, which it is hoped will boost the economy.

Commenting, analyst at Global Insight, Howard Archer said: "Quantitative easing is poised to come to the forefront in the Bank of England's ongoing efforts to stimulate the economy and this could very well start in March."

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