Banks set out response to reduction in base rate

Several UK banks and building societies have confirmed they would be passing a 25 basis points cut to existing mortgage holders and new customers, after the Bank of England lowered the country’s benchmark interest rate to a historic low of 0.25%.

Barclays also said its savings rates are now under review and customers will be contacted once a decision is made, giving them time to consider their options before any changes come into effect.

“For those customers on base rate linked products, we will reduce their rate by 0.25%”.

However, while tracker mortgages providers are legally obliged to pass on the cut, some mortgage providers remain non-committal on the date they would pass on the cuts, or if other types of variable rate mortgage accounts would also benefit atop tracker mortgages.

ME has also decreased interest rates on its variable home loan products by 0.10%. The Flexclusive Regular Saver, at 5%, the FlexOne Regular Saver at 3.5% and the Help to Buy Isa at 2% will be protected at current rates.

Yorkshire Building Society (includes the brands Yorkshire Building Society, Norwich and Peterborough Building Society, Chelsea Building Society and Accord Mortgages).

TSB. The bank is reviewing its rates and will make a further announcement shortly. Coventry is reviewing variable savings rates and will announce any changes no later than August 12. From September 1, the cut will be passed on in full to SVR and mortgage variable rate customers.

“Today’s decision takes our mortgage rates to new lows and provides our savings customers with some of the most competitive term deposit rates on the market today”, CEO and managing director, Jon Sutton said.

Rates on the majority of Skipton’s existing variable savings accounts will be reduced.

More specifically, this particular bank’s stock moved higher to 66.18 up +0.07%.

It said: “Neither our SVR nor our savings rates are directly linked to base rate, however in light of the Bank of England’s decision we are now reviewing our SVR and savings rates across our range and will notify our customers of any changes in due course”.

Co-op customers with tracker mortgages will see their rate fall in line with the base rate, unless their product has a floored rate, in which case the rate will not fall below the rate stated in the product terms and conditions.

RBS/NatWest said in a statement: “We are now reviewing whether we will make any changes to variable rate products and will provide an update in the near future”.

Shorter term 15 year fixed rate mortgage interest rates start at 2.750% today carrying an April of 2.872%.