Lenders heed calls for rate cuts

Published 08th Nov 2008

The main mortgage lenders have started to respond to the government's demand that they should cut their mortgage lending rates.

The Nationwide, HBOS, the RBS/NatWest group and nationalised Northern Rock will cut their main variable lending rates by the full 1.5% on 1 December.

Lloyds TSB and the Abbey announced similar steps on Thursday.

Prime Minister Gordon Brown had urged lenders to pass on the Bank of England's 1.5% cut in its Bank Rate.

The Bank of England's official rate was cut from 4.5% to 3% on Thursday.

The Libor rate at which banks lend to each other has also fallen since the cut.

In response the Nationwide is cutting its base mortgage rate by 1.5%, from 6.19% to 4.69%, while RBS/NatWest is cutting its standard variable rate (SVR) by the same amount, from from 6.69% to 5.19%.

The HBOS SVR is coming down from 6.50% to 5.00%.

The Nationwide, explaining its decision, said its borrowers would be "substantially better off".

"This is the right and fair course of action for Nationwide to take for all our borrowers at what is a very challenging time for everyone in the UK," said the society's chief executive Graham Beale.

Any changes to its savers' rates will be announced later.

Source: ' bbc '

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