Brown complains as banks wait after interest rate cut

Friday, 7 November 2008 1:46 PM

UK banks have only moved to drop tracker mortgages after yesterday's 1.5 per cent interest rate cut - with only two lenders cutting rates.

Some 30 mortgage providers have now withdrawn new tracker mortgages - with deals to be repriced and thrown back on the market next week at new margins over the now lower base rate.

Only Abbey and Lloyds TSB have moved to cut interest rates on their mortgage deals.

Both Gordon Brown and Alistair Darling have been pushing the banks to cut their lending rates in response to the Bank of England's massive 1.5 per cent rate cut yesterday.

The prime minister today said: "We are determined that not only interest rate cuts are passed through but also lending resumes.

"The government has done what it can, the Bank of England has done what it can. it is now up to the banks to take their lead seriously to resume lending and do so at rates that are appropriate and not rates that are excessive."

His comments following a morning meeting between bank chiefs and the chancellor of the exchequer.

The mood from Downing Street is that banks may not be expected to cut the full 1.5 per cent - but some reductions are needed.

However, the banks maintain the interest rates they charge are no longer tied to the base rate.

Angela Knight, British Bankers Association chief executive, said: "The rates banks charge depend on the price they themselves have to pay for money and the actual price of money is set by the wholesale market.

"This has stayed quite high but is now beginning to come down and we hope the Bank of England's dramatic rate cut will help ease the pressure and allow room for cuts to customers."

Today the London interbank offered rate dropped from 55.6 per cent to 4.49 per cent - raising hopes of drops on the high street.

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