Few lenders pass on rate cut in full

5 January 2009

Analysis by the personal finance website shows that since the Bank of England cut rates in December some 76% of lenders have reduced their SVR, but only 19% applied the full 1% cut.

Out of the lenders that have announced changes to their rates 72% of mortgage providers chose to pass on a cut of between 0.15% and 0.99%.

The research also reveals that five lenders still have an SVR of 6% or above, despite rates being at an all-time low of 2%.

Moneyfacts.co.uk says that Stroud & Swindon and Kent Reliance are among the culprits, with SVRs currently at 6.79% and 6.75% respectively.

Michelle Slade, analyst at Moneyfacts.co.uk, says: “With each base rate cut the number of lenders passing the cut on in full to their SVR continues to dwindle. It is likely that some lenders have already cut rates as low as they are prepared to go.

“Some building societies are opting not to cut their SVR so they can offer higher rates to their savers. But the three lenders with the highest SVRs have all cut savings rates by more than the base rate cut.”

She adds: “Customers with Cheltenham & Gloucester, Lloyds TSB Scotland and Skipton should continue to benefit as these lenders have a guarantee to offer an SVR at a set percentage above base rate.”