RBS to pass on only half of base cut to borrowers

Posted under General by Michael

Mortgage borrowers are being denied full base rate cut by RBS and its subsidiary NatWest. They will pass on only 50% of it to the customers.

The Bank of England had announced 0.5% base rate cut on SVRs (Standard Variable Rates) yesterday.

The lenders will pass on 0.25% of SVRs to borrowers, claiming that majority of customers will not lose because most of them are either on fixed rate or tracker deals.

Borrowers of tracker deals will be granted full 0.5% reduction, while borrowers with flexible mortgages will benefit from reduction of 0.25%. There will be no change for fixed-rate customers.

RBS and NatWest would like to weigh impact of the Bank of England’s downward trend of base rate cut on their savers.

Paul Geddes, head of the RSB group’s retail, argued that it was more important than ever for the group to consider impact on its savings and mortgage borrowers while determining any changes in the interest rate.

The bank’s decision will imply no change in current interest rates of majority of savings accounts. Reductions in rate in remaining cases would be below 0.2% on average.

Meanwhile Nationwide, Lloyds TSB, its Gloucestershire and Cheltenham subsidiary and Halifax would be reducing SVRs by 0.5%. Decisions of other lenders are not yet known.