Half of mortgage lenders failed to pass interest cuts on to homebuyers

The Bank's Monetary Policy Committee cut the base rate by a quarter point to 5.5 per cent two weeks ago, apparently throwing a lifeline to those with mortgages.

However, research by the personal finance website Moneyfacts.co.uk reveals that around half of lenders have so far failed to announce any cut.

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Many of the others have offered a limited reduction or cashed in by delaying any fall in mortgage bills to the new year.

The details came as the Council of Mortgage Lenders revealed the first annual fall in new home loans for two and a half years.

The figure for November was down by £2.5billion on the same month last year and confirms the property market is running into a slump in sales and prices.

The Moneyfacts research shows that one in four of the lenders who have announced a reduction are cutting their Standard Variable Rate (SVR) for mortgages by less than a quarter point.

These include troubled Northern Rock, which has reduced by 0.15 of a point, and Alliance & Leicester and the Cheshire Building Society, which have cut by 0.2 of a point.

Some of the smaller lenders which have introduced low base rate cuts can fairly argue that their SVRs are still relatively low when compared to most of the big banks.

For example, while the Beverley Building Society has cut by only 0.14 of a point, its SVR is now 6.8 per cent, which is much better value than the 7.5 per cent of the Halifax and 7.69 per cent of Northern Rock.

It is also clear that a number of lenders - around one in five of those who have announced a cut - will cash in by delaying the reduction until January.

The failure to pass on the full value of lower interest rates to homebuyers was confirmed by research from a second personal finance website, Moneysupermarket.com.

It said the SVR charged by the mortgage industry is expected to fall from an average of 7.57per cent from the beginning of December to 7.45 per cent by the start of January.

The reduction of 0.12 of a point is just under half the 0.25 announced by the Bank of England. Moneysupermarket's Louise Cuming described the performance of many lenders as "very disappointing".

The Bank of England has signalled that further base rate cuts are expected early in the new year. Some analysts believe the figure could fall to 4 per cent by Christmas 2008.

The Northern Rock fiasco has led customers to withdraw billions of pounds in savings from banks in the last three months and switch to the safe haven of building societies.

The amount deposited with societies has leapt £8.2billion in the last three months, more than the whole of 2006.