Rock yet to heed Darling's advice

The chancellor will be at key meetings in the next few days

Government-owned Northern Rock has yet to pass on interest rate cuts to mortgage customers on variable rates despite the chancellor's rallying call.

The Rock said its standard variable rate (SVR) was "still under review", a day after Alistair Darling said lenders should do more to help homeowners.

A host of Rock customers could be affected if they go onto the SVR when their fixed-rate deals expire.

A number of major lenders have already passed on last Thursday's rate cut.

A spokeswoman for Northern Rock said it was "not abnormal" for them to fail to change their variable rate immediately after a base rate move.

The bank is in the process of scaling back its mortgage business and has told customers that they could find better deals elsewhere.

A Treasury spokesman said the bank was being run at arms length and so the department did not interfere in operational decisions.

'Play your part'

Chancellor Alistair Darling on Sunday told lenders, who are expected to attend a Downing Street meeting in the coming days, that they should pass on recent interest rate cuts to homeowners.

Mr Darling said: "We are prepared to play our part. In turn, what we are saying to banks is you have got to help people as well."

"If you can pass on those interest rate reductions, if you can help homeowners, help businesses, that will help all of us get through a very difficult time."

The Council of Mortgage Lenders(CML) questioned the chancellor's assertion that lenders could do more to help homeowners.

Sue Anderson, of the CML, said major lenders had already promised that customers with variable rates - an estimated 20% of outstanding mortgages - would see a reduction.

She added that Mr Darling's call was irrelevant for the vast majority of mortgage holders, who have tracker mortgages, which automatically follow any reduction in the Bank of England's base rate, and fixed-rate mortgages.

Funding call

The CML said that "odd" credit market conditions were of greater concern.

To address this, lenders say fresh access to funds will be top of their wish list at a key meeting to discuss the state of the mortgage market.

The CML wants the Bank of England to provide more liquidity in the market to kick-start lending.

It is a political reality that this meeting has got a high profile Sue Anderson, Council of Mortgage Lenders

Ms Anderson added that this had become a political argument, that they did not want a "spat" with the government and wanted instead to concentrate on the key issue in the current mortgage squeeze which was access to funds.

"It is a political reality that this meeting has got a high profile," she said, while welcoming the opportunity to speak directly to the government.

The CML will meet Gordon Brown and Mr Darling in the coming days.

Ms Anderson said the CML's position had not changed since last week, when the group's chairman, Steven Crawshaw, said mortgage lending could be cut by half in 2008 compared to last year without extra funding from the Bank of England.

'Sticky situation'

The banks, who will be represented at a Downing Street meeting on Tuesday, will also call for the Bank to increase liquidity in the short term.

Angela Knight, chief executive of the British Bankers' Association, said that the rate at which banks were lending to each other was "very sticky indeed".

Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors, said the outlook for the housing market was key to bringing the UK out of the credit crisis.

The impact of a growing number of repossessions, and how this impact could be contained, was critical, he said.

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