Borrowers Set To Benefit From Lenders Interest Rate Cuts

Fri, 07 Dec 2007

Mortgage lenders Nationwide and Halifax have acted swiftly to yesterday’s announcement by the Bank of England to cut interest rates by 5.5 per cent.

Customers of the UK lenders are set to benefit as by both mortgage giants said they would cut 0.25 per cent off their standard variable rates (SVRs) by January 1 2008 - putting pressure on other mortgage lenders to follow suit.

Nationwide's base mortgage rate and tracker rate will also fall at the start of next year, although no date for a new savings rate has yet been named.

Nationwide is cutting its SVR to 6.99 per cent while the Halifax is reducing its SVR to 7.5 per cent. The reductions will result in approximately £16 a month off the cost of a typical £100,000 mortgage .

Those with a typical £140,000 mortgage will see their payments slashed by £23 a month, while those who have borrowed a £250,000 home loan will be able to save £40 a month in payments.

Michael Coogan, director general of the Council of Mortgage of Lenders (CML), explained the 0.25 per cent cut would help homeowners coming off fixed rate mortgage deals.

"A reduction in interest rates is exactly what the market needs and will benefit consumers," he said.

"This will reduce the risk of a payment shock for the 1.4 million borrowers coming off fixed rates in the next year."

The interest cuts have come as a surprise to many as commentators had predicted that lenders would delay reducing their mortgage rates due to the current credit crisis.
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