Nearly two-thirds of mortgage lenders have so far failed to pass on April’s interest rate reduction to borrowers, two weeks after the Bank of England base rate was cut.
Just 38 out of 100 lenders have so far said they will be reducing their standard variable rate (SVR), according to financial information group Moneyfacts.co.uk.
The group said the majority of lenders were passing on the full 0.25%, but five were reducing their rates by less than this.
Call to cut rate
These lenders included the recently nationalised bank Northern Rock, which is reducing its SVR by just 0.1%, despite the Prime Minister’s call for lenders to pass on the reduction to their customers.
Moneyfacts said that although many lenders had been quick to pass on the cut, 43% of them did not have any products that were linked to their SVR, meaning the number of borrowers affected by the move would be limited.
It added that the seven lenders with the most SVR-related products had still not announced how much, if any, of the rate cut they would be passing on.
The group said the average SVR was now 7.11%, although half of the UK’s top 10 lenders had rates that were higher than this, with Northern Rock having one of 7.49%.
It added that a number of lenders were also offering products at rates that were higher than their SVRs, with Nationwide and Halifax both offering deals to mainstream customers at higher rates.
Despite the reduction in base rates, 26 lenders have increased their margins on tracker mortgages for new customers, with the average tracker rate rising by 0.28% during the past month alone to 6.51%.
The cost of fixed rate mortgages has also increased, with two-year deals rising from an average of 6.29% to 6.52%, while five year ones are up from 6.12% to 6.37%.
Meanwhile the number of different mortgage products available has continued to decline, dropping from 7,931 at the beginning of the year to just 3,906 now, a reduction of nearly 50%.
The number of different deals available to people with only a 5% deposit has dived from 862 in January to just 268 now.
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