07 Feb, 2008
Published: 14:23 Thursday 07 February
By: David Campbell, Investment Reporter
Nationwide and Woolwich have said they will
pass on today's 0.25% Bank of England base rate cut to mortgage
borrowers, although other lenders remained noticeably silent.
Woolwich said it would pass on the change to customers currently
paying its standard variable rate from 1 March, while those on base
rate trackers would change immediately.
'The base rate cut is a welcome move as the housing market is
slowing considerably and mortgage affordability is stretched at the
moment,' said Andy Grey, head of mortgages at Woolwich.
Nationwide said that it would knock 0.25% from payments on its Base
Mortgage Rate, which is guaranteed to remain within 2% of the BoE
rate from 1 March, bringing it to 6.74%.
'This is good news for the quarter of UK borrowers on tracker rates
who will see an imminent reduction in rates,' said Michael Coogan,
director general of the Council of Mortgage Lenders.
'However, borrowers should not expect that a base rate reduction
will automatically result in a cut in standard variable rates or
discounted rates across the market.
'Lenders' rate setting policies are more complex than simply the
level of the base rate. They are determined by a range of factors
including the cost of retail funding and the cost and availability
of wholesale funding.'
Both Nationwide and Woolwich are able to draw on extensive consumer
deposit bases to finance their mortgage lending. Lenders reliant on
money markets for funding will not necessarily be able to reflect
the base rate change.