Rate cut passed on to most borrowers
Posted on 18 December 2007 by
Most mortgage lenders have passed on this month's interest rate cut to borrowers, though not all have reduced rates by the full 0.25 percentage points.
Earlier this month, the Bank of England reduced the Bank interest rate from 5.75% to 5.5%, in an attempt to counter signs of a slowing economy.
Although lenders welcomed the cut at the time, many analysts speculated that they would not drop their mortgage rates by the full 0.25 percentage points, and that some may not lower their rates at all. Some lenders had increased their mortgage interest rates in the months leading up to December, despite the Bank rate having remained unchanged since July.
Most major lenders have now reduced their rates, though some smaller firms have chosen not to pass the full cut on to consumers. Alliance & Leicester and Standard Life are among the larger lenders yet to announce any change.
"I am surprised at the extent to which the full cut has been passed on," Charcol's Ray Boulger told BBC News, "particularly when you bear in mind [the increased] cost of borrowing for almost all lenders."
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