Mortgage lenders slow to pass on interest rate cut

A number of major mortgage lenders have yet to decide whether to pass on last week's interest rate cut to their customers, it emerged today.

Just four of the UK's biggest lenders announced they would be reducing their rates in line with the drop in the Bank of England base rate on the day the monetary policy committee (MPC) announced it was reducing rates by 0.25% to 4.5%.

Britain's biggest mortgage lender Halifax, as well as HSBC, Northern Rock, and Cheltenham & Gloucester, part of the Lloyds TSB group, all announced they were reducing their rates by the full 0.25% on Thursday last week.

They were followed yesterday by Abbey, which also said it would be cutting its standard variable rate by a quarter of a percentage point.

But other major lenders, including the UK's biggest building society Nationwide, Barclays, the Woolwich, the Royal Bank of Scotland group, Alliance & Leicester and Bradford & Bingley all still had their mortgage rates under review today.

A spokesperson for Nationwide said: "Looking back historically, any rate changes that we make come in at the start of the following month ... we will make a decision in due course."

Bradford & Bingley said that rates were still under review and refused to comment on whether they would be making a decision soon.

Halifax's decision to cut its standard variable mortgage rate by the full 0.25% to 6.5% from September 1 will reduce payments by about £12 a month on an average £80,000 mortgage.

People with a £150,000 mortgage will see their monthly repayments fall by nearly £25, while those who have a £200,000 loan will be more than £30 a month better off.

Banks and building societies have also been slow to announce what will happen to their savings rates following last week's cut.

Abbey has reduced the majority of its savings rates by 0.25% and Halifax said it would make an announcement later this month. All the other major lenders said they had not yet made a decision on whether to cut their savings rates in line with base rate.

However, ING Direct cut its savings rate to 4.75% earlier this month in anticipation of the MPC's decision.