Page last updated at 09:36 GMT, Friday, 6 March 2009
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Not all lenders have been passing on cuts in full

RBS/NatWest will not pass on the latest cut in the Bank rate to its variable rate mortgage customers.

The bank, which is majority owned by the taxpayer, said it had to consider savers too and its standard variable rate (SVR) was already competitive.

Some of the UK's other big mortgage lenders have announced SVR cuts, although most were obliged to do so.

Most of the four million tracker mortgage customers in the UK will automatically benefit from the cut.


Halifax, Nationwide, Lloyds TSB and Skipton have all cut their standard variable rate (SVR) by 0.5 percentage points in line with the Bank rate cut.

It is more important than ever to consider both our savings and mortgage customers when determining any rate changes
Paul Geddes, RBS

Many of the lenders who are cutting rates are obliged to do so, having vowed that their SVR would only be a certain percentage above the Bank rate.

Abbey, which failed to reduce its SVR last month, has cut its rate this time by 0.45 of a percentage point. The changes only come into effect from 1 April.

But RBS/NatWest said that it was going to keep its SVR at "its current competitive rate" of 4%.

"The continued downward trend to Bank of England base rate has had a significant impact on customer savings rates. It is more important than ever to consider both our savings and mortgage customers when determining any rate changes," said Paul Geddes, chief executive of RBS retail banking.

Unlike some lenders, RBS/NatWest does not have a collar on tracker deals, so customers with tracker mortgages will benefit from the Bank rate cut. Fixed-rate customers, by definition, will see no change.

The bank stressed that interest rates for savings accounts would fall, on average, by less than 0.2% and many would be unchanged.

RBS last week announced the largest annual loss in UK corporate history and that it would receive a fresh injection of taxpayers' money. It is also under fire over the pension of former boss Sir Fred Goodwin.


Following the previous five Bank rate cuts, the average SVR had settled at an average of about 4.77%, according to financial information service Moneyfacts.

Only 41% of lenders passed on any of the February Bank rate cut to their SVR borrowers.

"This latest cut presents immense challenges for lenders whose margins are already squeezed as a result of previous reductions, leaving little scope to lower discretionary mortgage rates further," said Michael Coogan, director general of the Council of Mortgage Lenders (CML).

"Savings are the lifeblood of mortgage lending, and unless lenders can offer competitive rates to savers, their ability to offer new mortgages is restricted."

Those on tracker deals will typically see a 44 reduction, to 841, in their monthly repayments on a 25-year 150,000 repayment mortgage.

Ray Boulger, of mortgage brokers John Charcol, said he expected to see lenders, such as Abbey, who failed to cut their SVR rate following the February reduction in the Bank rate to do so this time.

Many of those who cut their SVR last time would keep it unchanged following the Bank of England's latest decision, he predicted.

While Halifax will cut its rate again to 3.5%, Bank of Scotland mortgage customers face a SVR of 4.84% which is still under review - despite being part of the same banking group.

Lender February SVR Change after March BoE decision* New SVR Total SVR cut since October*
SVR: Standard Variable Rate
* Percentage points
Halifax 4.00% -0.50 3.50% 3.50
Nationwide BS 3.00% -0.50 2.50% 3.99
Abbey 4.69% -0.45 4.24% 2.85
Lloyds TSB/C&G 3.00% -0.50 2.50% 4.50
Northern Rock 4.79% Under review 2.70
Barclays (Woolwich) 4.99% Under review 2.15
RBS 4.00% No change 4.00% 3.19
HSBC 3.94% No change 3.94% 2.31
Alliance & Leicester 4.99% Under review 2.20
Bradford & Bingley 4.59% Under review 2.50
Bristol & West 3.49% -0.5 2.99% 4.10
Britannia BS 4.49% Under review 2.31
Yorkshire BS 4.99% Under review 1.91
GE Money 7.94% Under review 2.45
Coventry BS 4.74% Under review 2.35
Standard Life 5.34% No change 5.34% 1.75
Clydesdale & Yorkshire 4.59% No change 4.59% 2.70
Chelsea BS 5.79% No change 5.79% 1.15
Skipton 4.00% -0.50 3.50% 2.95
One Account (RBS) 4.35% -0.25 4.10% 2.95

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