2 Apr

Base rate cuts 'partially' passed on

Base rate cuts 'partially' passed on

The recent base rate cuts have been passed on by some lenders but not all have seen the full benefit, it has been stated.

Royal Bank of Scotland Global Banking & Markets economist Ross Walker noted there has been a "partial" pass through of recent reductions in the base rate, something which has helped reduce some mortgage costs.

However, he said, the fact that this has not been fully felt is a reason the Bank of England has considered itself able to slash rates as "aggressively" as they have.

"You couldn't reasonably have a mortgage based at 0.5 per cent interest rate. It wouldn't reflect risk, it wouldn't reflect the real cost of capital," he remarked.

Mr Walker's comments tally with the findings of a study by finance website Moneyfacts, which showed that only 29 per cent of mortgage providers have lowered their standard variable rates since the latest reduction.
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