Building societies failing to pass on interest rate cuts
Many building societies have not passed on April's cut in interest rates
Thursday, 15, May 2008 09:36
Twenty-four mortgage lenders have still not passed April's cut in interest rates onto borrowers, according to money search engine Moneyfacts.co.uk.
Michelle Slade, analyst at Moneyfacts.co.uk, said of those that had several had only made very small cuts which were well below the 0.25 per cut.
She ssaid: "20 (28 per cent) have announced a cut of less than 0.25%. Even more disappointingly is the fact that those lenders which have passed on the smallest cuts offer some of the highest standard variable rates(SVR)."
The majority of lenders that so far have not passed on the cut or have passed on less than the 0.25 per cent cut are building societies, according to Moneyfacts. Of the 51 building societies that offer mortgages, 18 (38 per cent) have so far not announced their intentions and another 18 (38 per cent) have announced cuts of less than 0.25 per cent.
And two lenders, the Catholic Building Society and Chorley & District Building Society, have failed to pass on the Bank of England's February interest rate cut and so far have not said they will be passing on the April cut either. Chorley & District has the most products linked to its SVR in the market, so both new and existing customers are being penalised, Slade said.
"Anyone wishing to go onto an SVR is likely not to be charged a product fee. With some lenders' SVR rates now running at similar levels to the rest of their mortgage range, the SVR is becoming part of lenders' standard product range," She added.
"In some cases, rates being offered are at levels higher than SVR and a few lenders have stopped offering their SVR rate to new customers. These include ING Direct, Halifax, and Lloyds TSB.
"With falling house prices and borrowers finding it harder and harder to get a new deal, the lenders' SVRs are becoming a more attractive option, but these lenders do not want to take on the more risky borrowers who do not have enough equity in their home to get a good deal."