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| Government urges lenders to act | Government urges lenders to act |
| (30 minutes later) | |
| Prime Minister Gordon Brown says the government has met lenders to urge them to pass on the cut in interest rates. | Prime Minister Gordon Brown says the government has met lenders to urge them to pass on the cut in interest rates. |
| He said the Treasury and the Bank of England had acted to help lenders and now banks should take the lead. | He said the Treasury and the Bank of England had acted to help lenders and now banks should take the lead. |
| Chancellor Alistair Darling held a breakfast meeting with bank bosses this morning to press the government's case. | Chancellor Alistair Darling held a breakfast meeting with bank bosses this morning to press the government's case. |
| The Bank of England's official rate was cut from 4.5% to 3% on Thursday. The Libor rate at which banks lend to each other has fallen since the cut. | The Bank of England's official rate was cut from 4.5% to 3% on Thursday. The Libor rate at which banks lend to each other has fallen since the cut. |
| The first lender to respond has been the Nationwide building society, which has cut its base mortgage rate by 1.5%, from 6.19% to 4.69%. | |
| It follows similar moves by Lloyds TSB and Abbey on Thursday. | |
| See how the major lenders have reacted | See how the major lenders have reacted |
| "We are determined to get banks to resume lending," Mr Brown said. | "We are determined to get banks to resume lending," Mr Brown said. |
| Chancellor Darling met the banks at the Treasury, and the banks attending were thought to include Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland and Standard Chartered. | Chancellor Darling met the banks at the Treasury, and the banks attending were thought to include Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide, Royal Bank of Scotland and Standard Chartered. |
| 'Commercial decision' | 'Commercial decision' |
| The Council of Mortgage Lenders (CML) said lenders would cut their rates by between 0.5 and 1.5 percentage points in the coming weeks. | The Council of Mortgage Lenders (CML) said lenders would cut their rates by between 0.5 and 1.5 percentage points in the coming weeks. |
| The problem banks have got is that they have limited funds and don't have enough money to give to all the customers who may want them Michael Coogan, CML UK mortgage market in graphicsBank lending rate falls sharply | The problem banks have got is that they have limited funds and don't have enough money to give to all the customers who may want them Michael Coogan, CML UK mortgage market in graphicsBank lending rate falls sharply |
| However, the CML warned that the precise level of the reductions would be a commercial decision for each individual lender. | However, the CML warned that the precise level of the reductions would be a commercial decision for each individual lender. |
| Michael Coogan, director general of the CML said: "The problem banks have got is that they have limited funds and don't have enough money to give to all the customers who may want them. | Michael Coogan, director general of the CML said: "The problem banks have got is that they have limited funds and don't have enough money to give to all the customers who may want them. |
| "I think over the next few days and weeks we will see that the banks and building societies will move by anywhere between 0.5% and 1.5% - the individual decisions will be on the basis of assessing what they want for their savers as much as what they want for their borrowers," he added. | "I think over the next few days and weeks we will see that the banks and building societies will move by anywhere between 0.5% and 1.5% - the individual decisions will be on the basis of assessing what they want for their savers as much as what they want for their borrowers," he added. |
| These cuts would be for existing customers on standard variable rate (SVR) deals, with deals for new borrowers likely to be re-priced. | These cuts would be for existing customers on standard variable rate (SVR) deals, with deals for new borrowers likely to be re-priced. |
| Almost all tracker mortgages have been withdrawn for new borrowers as lenders consider at what rates to reintroduce them. | Almost all tracker mortgages have been withdrawn for new borrowers as lenders consider at what rates to reintroduce them. |
| Duty | Duty |
| Conservative Party leader David Cameron said that banks that had taken part in the government's bail-out programme should be forced to pass on Thursday's interest rate cut. | Conservative Party leader David Cameron said that banks that had taken part in the government's bail-out programme should be forced to pass on Thursday's interest rate cut. |
| Whereas it's wholly rational for any individual bank to take a much more cautious and conservative approach to lending, it's wholly irrational for all of them to do so at precisely the same time BBC Business Editor Robert Peston Read Robert Peston's blog | Whereas it's wholly rational for any individual bank to take a much more cautious and conservative approach to lending, it's wholly irrational for all of them to do so at precisely the same time BBC Business Editor Robert Peston Read Robert Peston's blog |
| Lloyds TSB, HBOS and Royal Bank of Scotland, which owns NatWest, have taken government cash to strengthen their finances. | Lloyds TSB, HBOS and Royal Bank of Scotland, which owns NatWest, have taken government cash to strengthen their finances. |
| Mr Cameron added that other lenders should also cut rates. | Mr Cameron added that other lenders should also cut rates. |
| The problem, lenders say, is that the key to mortgage costs is not the Bank of England's base rate but Libor - the London Interbank Offered Rate - which is the rate at which banks lend to each other. | The problem, lenders say, is that the key to mortgage costs is not the Bank of England's base rate but Libor - the London Interbank Offered Rate - which is the rate at which banks lend to each other. |
| The three-month sterling Libor rate - which has the greatest influence on new tracker mortgages - fell from 5.56% to 4.49% on Friday, its lowest level since the end of 2005. | The three-month sterling Libor rate - which has the greatest influence on new tracker mortgages - fell from 5.56% to 4.49% on Friday, its lowest level since the end of 2005. |
| But the rate remains almost one and a half percentage points above the Bank of England's base rate - still well above pre-credit crunch levels. | But the rate remains almost one and a half percentage points above the Bank of England's base rate - still well above pre-credit crunch levels. |
| Nationwide | |
| A number of building societies have said they could take weeks to decide whether to pass on the cut. This would be to consider the effect on savers and to monitor Libor. | |
| The Nationwide, explaining its decision, said its borrowers would be "substantially better off". | |
| "This is the right and fair course of action for Nationwide to take for all our borrowers at what is a very challenging time for everyone in the UK," said the society's chief executive Graham Beale. | |
| Any changes to savers' rates will be announced later. | |
HOW MORTGAGE LENDERS RESPONDED | HOW MORTGAGE LENDERS RESPONDED |
| Lender SVR before BoE decision SVR after BoE decision Rate change (percentage points) HBOS 6.50% Under review  Nationwide BS 6.19% Under review  Abbey 6.94% 5.44% -1.5 Lloyds TSB/ C&G 6.50% 5.00% -1.5 Northern Rock 7.34% Under review  Barclays 6.64% Under review  RBS 6.69% Under review  HSBC 6.25% Under review  Alliance & Leicester 6.94% Under review  Bradford & Bingley 7.09% Under review  Bristol & West 6.59% Under review  Britannia BS 6.30% Under review Yorkshire BS 6.60% Under review  GE Money 10.39% Under review  Coventry BS 6.84% Under review  Standard Life 6.59% Under review  Clydesdale & Yorkshire 6.64% Under review  Chelsea BS 7.24% Under review  Skipton 6.45% Under review  SVR: Standard Variable RateAny changes take effect from 1 December | Lender SVR before BoE decision SVR after BoE decision Rate change (percentage points) HBOS 6.50% Under review  Nationwide BS 6.19% Under review  Abbey 6.94% 5.44% -1.5 Lloyds TSB/ C&G 6.50% 5.00% -1.5 Northern Rock 7.34% Under review  Barclays 6.64% Under review  RBS 6.69% Under review  HSBC 6.25% Under review  Alliance & Leicester 6.94% Under review  Bradford & Bingley 7.09% Under review  Bristol & West 6.59% Under review  Britannia BS 6.30% Under review Yorkshire BS 6.60% Under review  GE Money 10.39% Under review  Coventry BS 6.84% Under review  Standard Life 6.59% Under review  Clydesdale & Yorkshire 6.64% Under review  Chelsea BS 7.24% Under review  Skipton 6.45% Under review  SVR: Standard Variable RateAny changes take effect from 1 December |
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