Lenders say they will pass on base rate cut
Following the recent 1.5% base rate cut, and in response to calls from the Prime Minister, Gordon Brown, a number o major lenders in the UK have said that they will be passing on the full 1.5% rate cut to borrowers over the coming weeks. As hoped by the government this could help to ease the financial situation for many consumers, and could ultimately help to boost the flagging economy, as consumers find themselves with more money to spend in the run up to Christmas.
Some of the banks announced their decisions the day after the interest rate cut was announced, and the move was welcomed by the Prime Minister, Gordon Brown, who stated: “Yesterday, we saw decisive action on interest rates from the Bank of England and the European Central Bank, and I welcome the fact that a number of British banks have now decided to pass on the interest rate cut to customers, to families and to businesses.”
A number of major lenders have decided to reduce their interest rates in response to the base rate cut, and one of these is Nationwide, which has said that its borrowers could find themselves significantly better off in terms of their finances following the rate cut.
One official from the building society stated: “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.”
The CML has said that each lender will have to make an individual commercial decision with regards to how much of the cut to pass one. An official from the CML said: “The problem banks have got is that they have limited funds and don’t have enough money to give to all the customers who may want them. I think over the next few days and weeks we will see that the banks and building societies will move by anywhere between 0.5% and 1.5% – the individual decisions will be on the basis of assessing what they want for their savers as much as what they want for their borrowers.”
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