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Make sure rate cuts give you a cheap mortgage

Date: Wed, 17 Aug 2005

Research by financial information company Moneyfacts revealed that just 58 of 120 lenders have passed on the latest 0.25 per cent saving to customers.

Although some lenders such as the Halifax, cut rates immediately, many banks are still considering their decision nearly two weeks after the Bank of England dropped the rate to 4.5 per cent.

Other mortgage providers such as the Royal Bank of Scotland and NatWest have confirmed that do not plant to pass on the full 0.25 per cent cut, instead it will lower its interest rates by 0.2 per cent, claiming that previous interest rate rises were not fully passed on to borrowers.

Analysts believe that increasing competition in the mortgage market to offer cheap home loans could mean that some lenders are now attempting to recover money by delaying the passing on of rate reductions

Ray Boulger, senior technical manager at mortgage broker John Charcol, said: "When lenders announce the rate is far less important than how much they cut it by.

"You have to be more suspicious of lenders who have in the past cut very quickly but this time round chose to delay," he added.


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