Tracker loans whisked away as base rate cut to 3%

Tracker loans whisked away as base rate cut to 3%

Leading lenders withdrew tracker mortgages just hours before the Bank of England’s Monetary Policy Committee agreed an historic 1.5% cut in the base rate, to 3%.

Lloyds TSB and its Cheltenham & Gloucester (C&G) unit, Northern Rock and Woolwich have all withdrawn tracker products today.

Yesterday, the Council of Mortgage Lenders (CML) warned that lenders would not necessarily pass on today’s expected rate cut and earlier this week, Abbey increased its tracker margins by up to 0.5%, in anticipation of the reduction.

Halifax and Nationwide also took action last week, raising some of their tracker margins by 0.5% and 0.4% respectively.

Lloyds TSB and C&G will be launching a new tracker range next week, with margins no doubt adjusted to take into account today’s base rate cut.

However, Lloyds TSB says it will pass on the full base rate reduction to borrowers on its standard variable rate (SVR).

Politicians have been urging lenders to pass on cuts but research from financial information website, Moneyfacts.co.uk, has revealed that half of the UK’s mortgage lenders have failed to reduce their SVRs in line with recent reductions in the base rate.

The CML argues that lenders are forced to price their loans in line with the rates they need to offer depositors and the rates they pay to borrow on the wholesale money markets.

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