UK's largest lender cuts mortgage rates

HBOS has become the first of the major mortgage lenders to respond to yesterday's decision by the Bank of England to cut interest rates by a quarter of a per cent from 4% to 3.75%. The lender announced today that it will cut the rates of its standard variable rate mortgages by 0.1%.

The reductions will come into immediate effect for new customers, and from March 1 for existing borrowers.

With its five mortgage brands (Halifax, Bank of Scotland, Birmingham Midshires, The Mortgage Business and Intelligent Finance), HBOS is the UK's largest mortgage lender and commands a 31% share of the market. Although the cut of 0.1% is minimal, and more of a gesture than anything else, the industry has been awaiting HBOS's response to the cuts with interest, since where it goes the other major lenders tend to follow.

Sainsburys and Virgin have already cut their standard variable rates by the full 0.25%.