Banks 'under pressure' to pass on rate cut

7 November 2008

Following the Bank of England's shock 1.5 per cent interest rate cut, the UK's banks are coming under pressure from politicians, the media and housing groups to pass on the reduction in their own rates for loans and mortgages, according to reports.

Yesterday (November 6th), the Bank's monetary policy committee initiated the biggest cut in the base rate since 1981 - taking it to its lowest level since 1955 at three per cent.

Abbey and Lloyds TSB, which is committed to keeping its rates within two per cent of the Bank's, have already said they will pass on the reduction.

Barclays, HSBC and the UK's biggest mortgage lender, Halifax, have all said their rates are under review.

However, around 30 lenders have already pulled their tracker loans off the market until they decide on a new rate, the Associated Press said.

The chancellor, Alistair Darling, told the BBC: "I think it's essential that the banks do pass on the benefit of lower interest rates to people and to businesses."

Others calling for reductions include chief secretary to the Treasury Yvette Cooper, the National Association of Estate Agents and the Royal Institution of Chartered Surveyors.

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