Mortgage rates cut

The cost of taking out a mortgage is coming down

Britain's biggest lenders have reacted to the Bank of England's 0.25% cut in interest rates with a cut in mortgage rates.

Mortgage bank Abbey National said it was cutting its standard variable mortgage rate by 0.25 points to 7.49%.

Halifax said it was cutting its variable rate by 0.24 points to 7.50%.

HSBC is cutting its home buyer variable rate from 6.75% to 6.5% for borrowing under £250,000.

For borrowing over £250,000, it is cutting the rate from 6.5% to 6.25%.

Nationwide Building Society, Britain's largest mortgage lender, said it was watching the market's response.

Its 7.09% variable mortgage rate is among the lowest available.

Virgin said it was dropping mortgage rates for its One account customers by 0.25%, effective from midnight tonight.

Scott Mowbray, marketing manager at Virgin One, said: "We are pleased, once again, to commit to a full interest rate reduction for mortgage customers.

"Competition for new mortgage business is set to be fiercer than ever in 2001, and so any failure among lenders to match this cut could see consumers vote with their feet."

The Bank of England cut its key UK interest rate by 0.25% to 5.75% on Thursday, in a move widely anticipated by the financial community.

It was the first cut for nearly two years.