Halifax and Nationwide Pass On Rate Cut

It is not the kind of news we expect to hear, but at last there is some good news for weary mortgage borrowers. Not only did the Bank of England reduce the base rate by a quarter of a percent to 5.5% on Thursday, but mortgage giants Halifax and Nationwide both said that they would be passing on the whole cut.

Straight after the Bank announced the cut in the base rate, both mortgage lenders announced that they would be making the same 0.25% cut to their standard variable rates from 1 January 2008.

The announcements come as a welcome surprise as most people felt that mortgage lenders would delay, hold back some of the cut, or do both in an attempt to hold on to some cash in these days of banks’ cash shortages in the global credit crunch.

With two of the biggest mortgage lenders passing on the whole cut, it will bring pressure to bear on other lenders to do the same with their own mortgage rates.

Halifax will cut its SVR to 7.5%, and Nationwide’s will be reduce to 6.99%, taking about £16 of an average £100,000 mortgage. Payments will change from £755.32 to £738.99 with the new rate of 7.5%. First-time buyers will also see a glimmer of hope for their chances of buying a home, as payments will fall by around £20 for a new mortgage of £120,000.

People moving home, who typically borrow about £140,000, will see payments go down by around £23 a month to about £1,035 and anyone with a big mortgage of £250,000 will see their repayments reduced by over £40 a month.

Other than these two, lenders were more cautious in announcing new rates. No other decisions were announced, with all the major banks saying that mortgage rates were under review