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Last Updated: Tuesday, 16 August 2005, 10:15 GMT 11:15 UK
Lenders fail to pass on rate cut
A pen and paper
Some lenders are yet to announce if they will cut rates
More than half of all mortgage lenders have failed to pass on the full Bank of England interest rate cut to borrowers.

Financial information group Moneyfacts said 58 of 120 lenders had passed on the Bank's 0.25 percentage point cut.

Some lenders argue that replicating the rate cut is not necessary because they did not pass on past increases, while others say they have yet to decide.

But lenders which had not passed on the full rate cut were unlikely to do so soon, a mortgage expert warned.

How these things usually work is that if the lender is going to pass on the full cut they announce so fairly quickly
Ray Boulger, Charcol

Lender reaction

The Bank of England's Monetary Policy Committee (MPC) cut interest rates by a quarter of a percentage point to 4.5% on 4 August.

Some lenders, most notably the Halifax, the UK's largest, immediately followed suit.

But others have held off cutting borrowing costs or have trimmed them by less than the Bank's quarter point move.

Nationwide Building Society cut its standard variable mortgage rate by 0.1 point, while Royal Bank of Scotland (RBS) reduced rates by 0.2 point.

However, RBS argued that it reduced rates by a lower amount because it had not followed the Bank of England in raising rates in the past.

In total, 12 lenders have announced rate cuts of less than a quarter percentage point, while 58 lenders have reduced rates by a minimum 25 basis points.

The remaining lenders are expected to announce whether they will cut rates before the end of this month.

According to one mortgage expert, borrowers may be disappointed when these lenders finally make their statements.

"How these things usually work is that if the lender is going to pass on the full cut they announce so fairly quickly," Ray Boulger, technical director at mortgage advice firm Charcol, told BBC News.

"Any delay in an announcement raises suspicions as to whether the full cut is going to be passed on."

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