Mortgage firms passing on the rate-cut benefit
London ( Ask4loan ) December 7, 2007: The mortgage firms are fully passing on the benefit of the reduced interest rates to their customers. Halifax and Nationwide, two of the largest lenders in the UK have already reduced their standard rates after the Bank of England announced a 0.25 per cent cut in its base rate of interest.
Other mortgage lenders are yet to pass on the benefit to the customers. However, the swiftness shown by Halifax and Nationwide is likely to put pressure on the other lenders to do the same. Many lenders said that they were reviewing their interest rates. It is estimated that if lenders pass on the full benefit to their customers, it will knock between £15 and £20 off the monthly repayments on a £100,000 mortgage.
The interest rates in the UK witnessed a steep rise following the global credit crunch. Secured loans, mortgages and personal loans became costlier by upto 4 per cent points. The Bank of England's Monetary Policy Committee had been under pressure to cut the interest rates to give a boost to the sluggish economy.
The Director for the Council for Mortgage Lenders said: "A reduction in interest rates is exactly what the market needs and will benefit the consumers. This will reduce the risk of payment shock for the 1.4 million borrowers coming off fixed rates in the next year."