Chancellor urges lenders to pass on BoE rate cut

Alistair Darling has urged the UK's mortgage lenders to pass on the Bank of England base rate cut to ease the credit crunch.

Gordon Brown revealed the chancellor will meet with the heads of the top British banks tomorrow to discuss global market turmoil and regulation.

Mr Darling told the BBC: "The government is playing its part. We are doing whatever we can to get through these problems, which are unprecedented in recent times. In return, I hope the banks will do more to make mortgages available."

He added: "Many of them are passing on rate cuts but we want to ensure that by making additional funds available we will help reopen the mortgage market."

The Bank of England cut the base rate again to five per cent this month, despite concerns over inflation, in order to support the economy.

The cut follows two 0.25 per cent reductions in December and February, brining the rate down from 5.75 per cent.

But the reduction will not help the property market unless lenders pass it on. Halifax, Nationwide and Barclays' mortgage arm the Woolwich were all among the banks who immediately said they would cut their standard variable rate.

But Nationwide and Alliance & Leicester said they were increasing their fixed-rate deals by 0.35 per cent.

Banks will be unwilling to reduce their rates as long as the Libor (London Interbank Offered Rate) remains high.