50% of lenders leave SVRs untouched by base rate cuts

| October 31, 2008 | 0 Comments
50% of lenders leave SVRs untouched by base rate cuts

Financial information provider, Moneyfacts.co.uk, has revealed that half of the UK’s mortgage lenders have failed reduce their standard variable rates (SVR) in line with recent cuts in the base rate.

According to the firm’s research, 50% of lenders have not made any reduction in SVR, from the October base rate cut.

Meanwhile, 82% of lenders have not passed on the full amount of the last three base rate cuts, which total a reduction of 1%.

Of this group, 57% have reduced their SVRs by 50% or less, of the full 1% cut.

Moneyfacts mortgage expert, Darren Cook, comments that lenders are facing tough decisions as historically they have cut SVRs in response to a reduction in the base rate.

However, analysts expect the Bank of England to begin making aggressive cuts in the months ahead, to stave off a serious recession, and lenders funded by borrowing on the money markets may be unable to follow this lead if they are to preserve their profit margins.

Mr Cook explains that in the past, few mortgages have been based on a lender’s SVR, however, as the credit crisis pushed up the cost of other types of home loan, lenders’ SVRs have become more attractive.

According to Mr Cook, some SVR deals are now under priced, compared to the rest of the mortgage market.

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