HSBC will not pass on Bank's rate cut

Published 05th Nov 2008

Homeowners' hopes of relief from the financial crisis were dashed last night as Britain's biggest bank cautioned that it was unlikely to give them the full benefit of this week's expected cut in interest rates, and another bank prepared to put up its charges tomorrow.

Downing Street expressed its frustration with HSBC after a bank executive travelling with Gordon Brown on his trip to the Gulf said that it would not pass on all of any reduction.

Abbey provoked anger by saying that it was raising the rates on its tracker deals a day before the Bank of England was expected to cut rates by at least 0.5 per cent and possibly more.

Abbey, the second-biggest lender, will increase all tracker rates by 0.5 per cent tomorrow and will refuse to offer tracker deals to borrowers who do not have at least a 25 per cent deposit or 25 per cent equity in their existing property.

The Prime Minister, who finishes a four-country tour of the Gulf today, repeated his wish for banks to pass on the benefits of any cut to customers.

But David Hodgkinson, chief operating officer of HSBC — one of the few banks not to need help from the Treasury in recent months — said: “We will do our best but I will not give a categorical commitment that they [HSBC interest rates] will come down.”

HSBC's ability to reduce the cost of borrowing for customers also depended on the lending rate between banks, he told ITV news. “We would listen [to the Prime Minister] but we are in a very turbulent market where it is very difficult to predict what the market will do.”

Downing Street responded swiftly. Mr Brown's spokesman said: “The Prime Minister is very clear — we are taking the action we are taking in order to see that more mortgage holders and small businesses do feel the benefit of that action. When official rates are cut consumers would expect to see the benefits of that.”

Mr Brown told oil chiefs in a speech in Abu Dhabi that it was the duty of governments to ensure the resumption of lending to families and businesses.

Half of all banks and building societies failed to pass on any of last month's emergency half-point rate cut.

Source: ' times '

View All Latest News