£300m of Santander book will not feel BoE cut

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Santander UK will not pass on last week’s 0.25 per cent Bank of England base rate cut to around £300m, or 0.2 per cent, of its mortgage book.

Last week the Bank voted to cut base rate from 0.50 per cent to 0.25 per cent, leading many lenders to pass the cut on to their variable rate mortgage customers.

But Santander will not drop its variable mortgage rates below its floor of 1 per cent, affecting a fraction of its £152.8bn loan book.

A Santander spokeswoman says: “With the 0.25 per cent base rate cut, less than 0.2 per cent of our book are on products where the floors have come in.”

Interest rate floors are less of an issue for customers of the other top five lenders by market share.

Lloyds has a floor of 0 per cent. A Lloyds spokesman says “a handful” of its customers would see their interest rates drop to 0 per cent but could not give more detail.

Nationwide also has a floor of 0 per cent for all its tracker mortgages, which was introduced in June 2009.

Barclays and RBS have no floors on their variable rate mortgages.