View more on these topics

Brokers question benefit of BoE rate cut to borrowers

Home-House-Monopoly-Money-Property-700x450.jpg

Brokers have questioned the benefit of the Bank of England base rate cut to borrowers as new data confirms many lenders raised their rates just before the cut, while fewer than half have passed on the reduction to SVR customers.

Last week Moneyfacts said that several lenders raised their rates ahead of the 4 August Bank decision (see table below).

p4-1

Moneyfacts finance expert Charlotte Nelson says: “The average two-year tracker rate has been reduced by 0.19 per cent. However, shockingly, some providers, preempting the announcement, chose to increase their variable rate products, meaning the reductions have been offset.”

Bank governor Mark Carney said lenders had “no excuse” not to pass the cut onto borrowers.

Chadney Bulgin mortgage partner Jonathan Clark says: “Although there were clear indications that the MPC were going to drop rates, I was disappointed to see lenders increase tracker rate margins in the week before the announcement.

“This, coupled with many of them dragging their feet when it came to adjusting their SVRs means that many borrowers will simply not feel the benefit of a little more cash in their pockets, as Mark Carney and his colleagues intended.”

Your Mortgage Decisions director Dominik Lipnicki says: “This is why people lose faith in lenders, and I am not surprised to see that’s happened.”

But others defended lenders’ actions.

London Money director Martin Stewart says: “They have been hammered enough by low base rates. I don’t think it is up to anyone to tell a bank how to price money.”

Santander says the base rate cut has benefited its customers. It says it has passed on the full reduction to SVR borrowers. It also says it has not cut savings rates by more than the base rate reduction.

Nationwide says its existing borrowers have benefited from the base rate cut and it has made a number of price reductions across its product range. Coventry also says it passed on the cut to existing borrowers and says it has been reducing mortgage costs for new borrowers consistently over recent years.

A spokeswoman for Halifax and Scottish Widows says: “We continually review our rates in line with the market and competitors.”

TSB says its rate adjustments may be “up or down, and are influenced by a range of factors,” while an RBS and NatWest spokesman says its rate changes reflect “market conditions, competitor offers and our demand for business across our mix of products.”

A Virgin Money spokesman adds that its pricing reflects “prevailing hedging costs, interest rate risk, funding, risk appetite and overall market pricing” He adds: “That is why mortgage rates are around 150bps lower today than they were two years ago, despite base rates not moving until last month.”

Recommended

UK-Currency-Money-Pound-GBP-700x450.jpg

Virgin Money cuts rates on fixed rate range

Virgin Money is cutting rates on a number of fixed rate loans, including bringing a residential five-year fixed at 1.99 per cent up to 65 per cent LTV with a £995 fee. The lender now has a residential two-year fixed rate loan at 1.44 per cent, also at up to 65 per cent LTV with […]

Bank-of-England-Panorama-BoE-700x450.jpg
1

Fewer than half of lenders pass on rate cut to SVR borrowers

Fewer than half of lenders have failed to pass on the cut in the Bank of England base rate to borrowers on Standard Variable Rates, new figures show. Analysis by Moneyfacts.co.uk, the price comparison website, found that a number of lenders also hiked the price of variable rates on offer to new borrowers in anticipation […]

Scissors-Cut-Tailor-Measure-Measurement-700.jpg

Nationwide cuts entire fixed rate range by up to 0.20%

Nationwide is cutting most of its fixed rate mortgages by up to 0.20 per cent. The cuts apply to the lender’s two-, three-, five- and ten-year fixes. The two-year fixed rate products start at 1.49 per cent with a £999 fee and 1.89 per cent with no fee. The three-year fixes begin at 1.79 per […]

Europe: Nursery slopes

After a flat year for European equities, in which the Artemis European Growth Fund outperformed, manager Philip Wolstencroft is (cautiously) optimistic about 2016.

Health Shield

Product guide — health cash plans to suit all shapes and sizes

This guide, called ‘Health cash plans to suit all shapes and sizes’, provides information on Health Shield’s standard and tailored cash plans, which are designed to satisfy all business and employee needs. Each scheme can be offered on a voluntary, company-sponsored or flexible-benefits basis.

Newsletter

News and expert analysis straight to your inbox

Sign up