Halifax reduces mortgage rate

Britain's biggest mortgage provider, the Halifax, today put an end to speculation over how it would respond to last week's unexpected move by the Bank of England to cut interest rates by 0.25% to 3.5%. After taking the weekend to deliberate over its move, the lender announced this morning that it is to cut its standard variable mortgage rate (SVR) by 0.15%, from 5.65% to 5.5%.

The reduction will come into effect from August 1 for existing borrowers. Tracker customers, who will benefit from the full 0.25% cut, will see their mortgages move into line with the base rate on the same date.

The Halifax is the latest in a line of lenders to announce cuts to their standard variable rates in the wake of the Bank of England's decision. It is, however, the only major lender so far to withhold the entirety of the rate cut from its customers, despite pressure from consumer groups to pass on the full benefit. Sainsbury's Bank, The One account, Woolwich, Cheltenham & Gloucester and Barclays have all cut their standard variable rate by 0.25%. Abbey National also announced this morning that it was to cut its SVR by the full amount.

Nationwide, HSBC, Northern Rock and Bradford & Bingley have all yet to make an announcement.

Mortgage lenders are under considerable pressure to pass on the full benefit of Thursday's rate cut to their borrowers following the criticism levelled at the industry after so many lenders declined to cut their rates by the entire amount after the last quarter point cut in February.

Although Halifax has once again refused to cut by the whole 0.25%, it has responded to pressure by upping its cut from 0.1% in February to 0.15% this week.

Halifax today defended its decision to withhold 0.1% of the base rate cut. "Halifax's SVR is still in extremely competitive and still in line with the market", said spokesperson Paul Fincham.