Banks' limited response to rate cut

UK banks have made a limited response to today's interest rate cut from the Bank of England – with eight major lenders lowering their standard variable rate, but little else.

The lowering of rates by the Bank of England seemed to have little influence, as interbank lending rates continue to pressure lenders.

Halifax is dropping its standard variable rate (SVR) from 7.25 per cent to seven per cent.

However, the change will have limited effect as only a very small amount of Halifax borrowers are on the lender's SVR. Borrowers on tracker rate deals will also see rates fall.

Last week Halifax announced changes to its mortgage range seeing higher rates for those with lower deposits to put down on a purchase – meaning rates will be rising for new customers – despite the Bank of England now cutting rates three times since December.

Nationwide is also cutting its SVR – or base mortgage rate (BMR) - from May 1st to 6.49 per cent.

A spokesperson said: "The BMR will decrease by 0.25 per cent from 6.74 per cent to 6.49 per cent leaving it around 0.50 per cent lower than the SVRs of most other major high street lenders assuming that they also decrease their SVRs in line with the Base Rate."

Its existing tracker mortgages will also decrease by 0.25 per cent.

First Direct is also cutting its SVR – but the change will occur immediately and not at the beginning of next month.

The HSBC division's SVR will now be at six per cent.

Recently First Direct temporarily withdrew all its mortgage range to non-customers.

Even though the rate cuts were widely expected Alliance & Leicester has re-priced its mortgage range upwards.

It's two-year fixed rate deal now stands at 5.74 per cent with a two per cent fee. Its mortgage products without fees start at 6.59 per cent.