Lenders begin to pass on rate rise

Halifax today followed in the footsteps of other banks and announced that it is to pass on the full Bank of England rate rise to its customers, following the monetary policy committee's decision to increase the base interest rate by 0.25% to 4.25% last week.

The bank, Britain's biggest mortgage lender, said it was increasing its standard variable mortgage rate to 6.25% from 6%, meaning that someone with a ?65,000 mortgage (the national average) will see monthly repayments rise by around ?10 to ?428.78.

Halifax said that the change would take immediate effect for new customers, and would come into force from June 1 - when it will also increase its savings rates - for existing ones.

Other banks who have announced that they will be passing on the full rate increase include Abbey National and Cheltenham & Gloucester, whose rates will rise to 6.25%, and Woolwich and Barclays, whose rates go up to 6.29% from June 1.

Internet and phone bank First Direct, on the other hand, said it would freeze its offset mortgage rate at 5% until further notice.

Other lenders, including Nationwide building society, HSBC and the Royal Bank of Scotland and NatWest, are still reviewing their rates today.

Even before the Bank of England announced the decision to increase rates, lenders took pre-emptive action. Alliance & Leicester, Britannia, Lambeth and Cheshire building societies all pulled lower-cost deals from the market, while others, including Abbey National, increased the interest charged on their fixed-rate mortgages.