Brown will force UK banks to pass on full rate cut
After the Bank of England's historic rate cut this week, banks have remained hesitant to pass on the rate cut to loan receivers. Many analysts are saying the current money market situation means it is impossible for the banks to match the base rate. But Gordon Brown is warning that he could force the banks to pass on the rate cut if they don't do it voluntarily.
Gordon Brown issued a stark warning to banks today, demanding that lenders must pass on yesterday's full 1 per cent interest rate cut to their customers.
The Bank of England yesterday cut the interest rate to 2 per cent — the lowest level since 1951 — following a surprise 1.5 per cent reduction in November.
The Prime Minister said this morning: "I think banks should really pass on the interest rate cut. We are talking to the banks.
“Remember last time there was a cut, we had to speak to them before it was passed on and we will be speaking to them again.”
So far, only Lloyds TSB, HSBC and Woolwich have pledged to reduce their standard variable rates (SVR).
However, Halifax, which is part of HBOS, the bank being bailed out by the taxpayer through a merger with Lloyds TSB, has cut its SVR by just 0.25 per cent. A borrower with a £150,000 loan paying Halifax’s SVR will see payments drop by only £25 a month. Nationwide said yesterday it will trim its rate by 0.69 per cent.