9 Jan

Banks have duty to pass on rate cuts, says PM

Banks have duty to pass on rate cuts, says PM

Mortgage lenders who have not cut interest rates in line with a reduction in the base rate of interest are in breach of their duty to their customers, the Prime Minister has said.

Data from financial website Moneyfacts.co.uk released yesterday revealed that one in five UK lenders has failed to pass on the Bank of England's recent 0.25 per cent cut in full.

However, in his monthly press conference Gordon Brown has said that "where interest rate cuts happen, buildings societies and banks have a duty to take that into account".

His comments were echoed by the Chancellor Alistair Darling, who stressed the benefit of cutting rates to UK homeowners who may be struggling with repayments.

He said: "I would hope if interest rates continue to come down, then the benefit of that reduction would be passed on to mortgage payers because that would benefit them and their families."

The base rate of interest currently stands at 5.5 per cent after December's cut.

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