Home loans return to 1950s

Mortgage rates yesterday fell to their lowest level since the 1950s, and a typical borrower with a £60,000 variable rate home loan has seen their monthly bill fall by between £58 and £90 since January.

Most mortgage lenders were quick to react to the latest Bank of England rate cut. But there was a split between those passing on the full quarter-point cut to borrowers, such as Halifax and Nationwide, and those such as Abbey National and Northern Rock, which only gave their borrowers part of the reduction.

Halifax, Britain's biggest lender with 2.5m borrowers, has cut its new variable interest rate from 5.75% to 5.5% - its lowest since July 1959.

This will mean a monthly saving of £12.50 for somebody with a £60,000 interest-only loan. Halifax's "old" variable mortgage rate, paid by hundreds of thousands of its borrowers, has been cut from 6.5% to 6.25%.

Nationwide building society has reduced its base mortgage interest rate from 5.49% to 5.24%, while its standard variable rate falls to 5.74% from 5.99%. It said that 5.24% was its lowest main home loan rate since 1955.

Abbey National, the second-largest lender, has again decided not to pass on all of the latest reduction to 500,000 borrowers tied into its old standard variable rate.

This was trimmed by 0.1% last month following the September 18 Bank of England quarter-point rate cut, and has now been reduced by a further 0.15% to 6.5%. Northern Rock's standard variable rate has been trimmed by 0.2% to 6.3%.

Abbey National and others that did not pass on the full interest rate cut explained their actions by saying they wanted to protect savers.

"We are particularly mindful that base rate cuts hurt most those who have retired and have paid off their mortgage and rely on savings for income," said Abbey.

Most of the high street banks and building societies said changes to savings rates would be announced soon.