Scrooge lenders fail to pass on rate cut

Borrowers on Standard Variable Rate mortgages look set for a disappointing Christmas with 78 per cent of lenders yet to pass on the Bank of England's rate cut of early December.

The cut of 0.25 per cent on December 6 was the good news that many borrowers had been holding out for, but lower mortgage payments are yet to follow from the majority of lenders.

Another 37 per cent of lenders have announced a rate cut, but have said this won't take effect until the end of the month or the New Year.

Louise Cuming, head of mortgages at price comparison site moneysupermarket.com, said:" Lenders need to address their mandate of treating customers fairly. Four out of every five mortgage lenders have given themselves an early festive treat by not passing on the reduction to their Standard Variable Rates.

"In the current economic climate I would have liked to have seen providers showing a little more compassion towards borrowers who have spread themselves thin over the Christmas period.

"Time and time again we see this delay in passing on reductions. Perhaps providers' New Year's resolutions could be to pass on rate changes automatically or backdate them."

The research by moneysupermarket.com also revealed that 28 per cent of lenders to have announced a cut will not be passing on the full 0.25 per cent.

Louise Cuming added: "It is very disappointing to see cuts of only 0.14 to 0.20 per cent being passed on in many cases.

"At the start of December, the average SVR was 7.57 per cent. As things stand now, the average rate will only have fallen to 7.44 per cent by the start of January.

"The Bank of England decision to cut rates by 0.25 per cent was to try and boost the economy, but a cut of 0.13 per cent won't do that."