Several lenders already acted on interest rate cut : Credit Card Guide

Several lenders already acted on interest rate cut

Following this week's announcement from the Bank of England confirming that interest rates were to be cut by 0.25% several lenders have already acted on the interest rate cut by passing the full reduction on to borrowers.

The decision from the Bank of England came following the Monetary Policy Committee meeting on December 6th, and proved to be welcome news to both homeowners and industry officials who had been calling for an interest rate cut for several months.

The first to reduce their interest rates in line with the base rate reduction were Halifax and Nationwide. New borrowers will benefit from the lower standard variable rates with immediate effect, and existing borrowers will see the lower rate come into force from the beginning of January. The Halifax standard variable rate has dropped from 7.75% to 7.50%, and the Nationwide standard variable rate has fallen from 7.24% to 6.99%.

Industry experts stated that this swift action would prompt other lenders to act quickly in terms of cutting their rates, and sure enough First Direct, the Internet arm of HSBC, later announced that it would be cutting its standard variable rate with immediate effect for both new and existing borrowers, taking the lender's standard variable rate from 6.75% to 6.5%. Those on tracker rate mortgages are set to see their interest rates quickly fall. However, there will be no benefit to those on fixed rate deals, as their interest rate will remain unchanged.

Other banks and building societies have stated that they are now reviewing their interest rates in light of the base rate cut, and many are expected to make announcements over the next few days.

A CML spokesman stated: "A reduction in interest rates is exactly what the market needs and will benefit consumers."

Tom Smith

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