Even as some
mortgage lenders pull their
tracker loans off the market, it appears that others will not
pass the recent
Bank of England
interest rate cut to
borrowers . Although the 0.5 per cent
interest rate cut was intended to make
mortgages cheaper for borrowers, in reality the cut may not be
passed on.
Northern Rock are apparently not passing the
base rate cut to their customers, not yet at least.
Tracker mortgages are becoming more expensive across the
market, particularly for those borrowers with small deposits.
However, many
lenders will be passing the full base rate cut to borrowers,
typically saving
mortgage customers some money each month. The purpose of
Northern Rock holding off passing the cut on is to drive customers
to other banks. A Northern Rock spokesperson was reported as
commenting:
This is very much in line with the terms of the business plan
set out by the Treasury. Our aim is to generate mortgage
redemptions to allow us to repay the Bank Of England .
