Lenders Pass on Interest Rate Cut on Loan Products

Mon, 10 Nov 2008

A number of lenders have announced that they are to pass on the recent Bank of England base rate cut. The news comes as a relief to borrowers, who had initially been lukewarm about the prospect of dropping rates prior to their meeting with Chancellor Alistair Darling. Lloyds TSB and Abbey were the first banks to announce they would be reducing interest rates on loans to standard rate borrowers, with Lloyds reducing their rate to 5 per cent and Abbey dropping their interest rate to 5.4 per cent.

Among the other banks to reduce their interest rates were HBOS, Natwest and the Royal Bank of Scotland, who both passed on the full 1.5 per cent cut, whilst Bradford and Bingley also reduced the cost of some of its loans.

A typical £100,000 loan has seen repayments drop by almost £100 a month as a result of the interest rate cut. Meanwhile, any lenders who opted for a tracker rate at 0.25 per cent below the base rate two years ago are particularly enjoying the latest cut, which has seen their repayments fall to 2.75 per cent. However, there are likely to be further cuts, dropping the typical rates from their current level of around 5.5 per cent.
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