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C&G pledge to pass on interest rate cut in full
Jonathan Prynn, Consumer Affairs Editor06.11.08
ONE of Britain's biggest mortgage lenders has pledged to pass on in full any cut in the Bank of England's base rate today.
Cheltenham & Gloucester said: "We will be updating our standard variable rate (SVR) in line with any reduction made by the Bank of England."
The move will come into effect on 1 December.
It is highly unusual for any lender to make such a commitment ahead of changes in the base rate. The move follows criticism of the majority of banks and building societies that did not pass on the last 0.5 per cent cut early last month.
Cheltenham & Gloucester is owned by Lloyds TSB, one of the high street banks receiving taxpayer money as part of the government bail-out, and could have expected particularly harsh censure if it did not help out its customers.
The other lenders owned by banks accepting government help, including Halifax and NatWest, were likely to drop their SVRs later today, but many others may pass on only a part or even none, of the expected base rate cut.
City economists were predicting that the Bank would slash its base rate by at least 0.5 per cent to 4 per cent, but there have been increasing calls for a more dramatic full point reduction as Britain slides into recession.
A full point would be the biggest downward move since 1993. But measured as a percentage reduction in the cost of borrowing it would be the deepest since 1939.
There are now calls for interest rates to come down dramatically by the end of the year.
Jaguar Land Rover chief executive David Smith called for a "courageous and decisive change in interest rate policy".
"We need to see those getting much closer to US rates; much closer to the 2-3 per cent level by the end of the year," he told BBC Radio 4's Today programme.
"What we really need is this decisive action now to avoid that prolonged recession."
Reader views (6)
It's about time banks were made to pass interest cuts on to their customers. Loyal customers will be a thing of the past.
- Z Lester, England
It is high time that the FSA kept an accurate and up to date "online chart & league" tracking which financial institutions pass on the the rate cuts and to what extent, so that the greedy institutions can be named and shamed.
After all, this would be a most useful and transparent tool for consumers when they contemplate financial decisions.
- Fraser, Telford Park
Let us now see ALL finance rates fall.
Credit cards at 16.5 - 18% are now more than 500% over the base rate.
Store cards at 22% are now 650% over the base rate.
No wonder we all feel less well off.
- Steve, Cirencester, UK
They should be made to pass it on...They are quick enough to put it up when it goes up...
- Ann, warrington.England
Shame on you Abbey - I for one have closed my account.
- Jim, London
Amen to that .... every other lender out there: SHAME on you!
- Marianne, SW France
