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Building Societies fail to pass on the recent base rate cut

It has been revealed that the likes of Britannia, Nationwide, Melton Mowbray and Beverley building societies have not passed on the recent reduction in interest rates to the consumer. Despite assurance from the government that all reductions would immediately be passed on to the consumer we are already seeing signs that this deal is dead. So what next?

While the mortgage and loan markets are fairly quiet at the moment we could see a situation where those who do not pass on reductions are shunned by the consumer in favour of those seen to be 'playing the game'. This in itself could result in more pressure on some of the smaller financial institutions - and indeed some of the larger ones - as customers look elsewhere for the best deals.

How ironic would it be if those who have not followed the government's plan were then forced to go cap in hand to the authorities at a later date and beg for money? How ironic would it be if the government's stance actually led to one of more of these institutions going under? Time will tell, but until the financial sector starts to pull in the same direction the risks will not go away and there will forever be a cloud on the horizon.

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