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| Lenders heed calls for rate cuts | Lenders heed calls for rate cuts |
| (about 18 hours later) | |
| The main mortgage lenders have started to respond to the government's demand that they should cut their mortgage lending rates. | The main mortgage lenders have started to respond to the government's demand that they should cut their mortgage lending rates. |
| The Nationwide, HBOS, the RBS/NatWest group and nationalised Northern Rock will cut their main variable lending rates by the full 1.5% on 1 December. | The Nationwide, HBOS, the RBS/NatWest group and nationalised Northern Rock will cut their main variable lending rates by the full 1.5% on 1 December. |
| Lloyds TSB and the Abbey announced similar steps on Thursday. | Lloyds TSB and the Abbey announced similar steps on Thursday. |
| Prime Minister Gordon Brown had urged lenders to pass on the Bank of England's 1.5% cut in its Bank Rate. | Prime Minister Gordon Brown had urged lenders to pass on the Bank of England's 1.5% cut in its Bank Rate. |
| The Bank of England's official rate was cut from 4.5% to 3% on Thursday. | 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 also fallen since the cut. | The Libor rate at which banks lend to each other has also fallen since the cut. |
| See how the major lenders have reacted | See how the major lenders have reacted |
| In response the Nationwide is cutting its base mortgage rate by 1.5%, from 6.19% to 4.69%, while RBS/NatWest is cutting its standard variable rate (SVR) by the same amount, from from 6.69% to 5.19%. | In response the Nationwide is cutting its base mortgage rate by 1.5%, from 6.19% to 4.69%, while RBS/NatWest is cutting its standard variable rate (SVR) by the same amount, from from 6.69% to 5.19%. |
| The British Banking Association's Eric Leenders | The British Banking Association's Eric Leenders |
| The HBOS SVR is coming down from 6.50% to 5.00%. | The HBOS SVR is coming down from 6.50% to 5.00%. |
| The Nationwide, explaining its decision, said its borrowers would be "substantially better off". | 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. | "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 its savers' rates will be announced later. | Any changes to its savers' rates will be announced later. |
| Pressure | Pressure |
| Prime Minister Gordon Brown welcomed the banks' decisions. | Prime Minister Gordon Brown welcomed the banks' decisions. |
| 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 |
| "Yesterday, we saw decisive action on interest rates from the Bank of England and the European Central Bank, and I welcome the fact that a number of British banks have now decided to pass on the interest rate cut to customers, to families and to businesses," he said. | "Yesterday, we saw decisive action on interest rates from the Bank of England and the European Central Bank, and I welcome the fact that a number of British banks have now decided to pass on the interest rate cut to customers, to families and to businesses," he said. |
| The lenders had come under intense political and media pressure to pass on the Bank's decision to their customers as swiftly as possible, and in full. | The lenders had come under intense political and media pressure to pass on the Bank's decision to their customers as swiftly as possible, and in full. |
| Chancellor Alistair Darling held a breakfast meeting with bank bosses on Friday morning to press the government's case. | Chancellor Alistair Darling held a breakfast meeting with bank bosses on Friday morning to press the government's case. |
| 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 | |
| But the Council of Mortgage Lenders (CML) warned that the precise level of any reductions would be a commercial decision for each individual lender. | But the Council of Mortgage Lenders (CML) warned that the precise level of any reductions would be a commercial decision for each individual lender. |
| "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 told the BBC. | "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 told the BBC. |
| "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. |
| 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. |
| Lloyds TSB, which owns Cheltenham and Gloucester, has become the first to announce that it is to reduce the cost of fixed-rate deals for new borrowers. | Lloyds TSB, which owns Cheltenham and Gloucester, has become the first to announce that it is to reduce the cost of fixed-rate deals for new borrowers. |
| Some deals for those offering a deposit of at least 25% will become 0.3 of a percentage point cheaper from Tuesday. | Some deals for those offering a deposit of at least 25% will become 0.3 of a percentage point cheaper from Tuesday. |
| Duty | Duty |
| 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. |
| On the fifth floor of an imposing building in London's Canary Wharf, six people are putting together one of the world's most important numbers - the Libor rate Libor - the world's most important number? | On the fifth floor of an imposing building in London's Canary Wharf, six people are putting together one of the world's most important numbers - the Libor rate Libor - the world's most important number? |
| One 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. | One 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. |
| 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. | 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. |
HOW MORTGAGE LENDERS RESPONDED | HOW MORTGAGE LENDERS RESPONDED |
| Lender SVR before BoE decision SVR after BoE decision Rate change (percentage points) HBOS 6.50% 5.00% -1.5 Nationwide BS 6.19% 4.69% -1.5 Abbey 6.94% 5.44% -1.5 Lloyds TSB/ C&G 6.50% 5.00% -1.5 Northern Rock 7.34% 5.84% -1.5 Barclays 6.64% Under review  RBS 6.69% 5.19% -1.5 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% 5.00% -1.5 Nationwide BS 6.19% 4.69% -1.5 Abbey 6.94% 5.44% -1.5 Lloyds TSB/ C&G 6.50% 5.00% -1.5 Northern Rock 7.34% 5.84% -1.5 Barclays 6.64% Under review  RBS 6.69% 5.19% -1.5 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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