Banks Less Than Keen To Cut Loan Rates
The recent cuts which have been made by the Bank of England in the base rate of interest have come as a welcome Christmas present for those individuals who have existing secured loans and mortgages, particularly those who opted for a tracker rate who have now seen dramatic decreases in their monthly loan repayments over the course of the past three months, but banks and building societies are not quite as enthusiastic about the news as their customers seem to be.
Following the first cut in interest rates, of 1.5 per cent three months ago, the majority of lenders withdrew all their tracker secured loan products for a time.
These have steadily returned to the market, but with less attractive rates than previously and as the base rate has fallen further, there are now fewer and fewer options for someone who may be looking for a secured loan on a tracker product and a large number of those which have been re introduced now have collared rates, which will not allow the pay rate on the loan to decrease any further, regardless of what the base rate does.
According to Moneyfacts.co.uk, only ten lenders have so far passed on the full 1 per cent most recent rate cut to their customers by reducing their standard variable rate on secured loans.
Darren Cook of Moneyfacts said “Following the latest base rate cut, the average rate for a two year tracker has only reduced by 0.85 per cent, with the door of opportunity closing fast for new borrowers, with only 45 tracker products available overall.
As happened after November’s rate cut, new tracker rate mortgage deals quickly disappeared from view, but this time around they have failed to return to the market, mounting speculation that mortgage providers have strong views and expectations that the base rate will be cut again.”
