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Mortgage lenders decide to pass on base rate cut

It has been announced that the main mortgage lenders in UK have responded positively to further government pressure regarding mortgage rates. The Nationwide, HBOS, Royal Bank of Scotland and Northern Rock will each cut their variable lending rates by 1.5% although this will not kick in until 1 December. Lloyds TSB and the Abbey have already announced their plans to reduce rates as the pressure on the sector reaches breaking point.

Finally we are seeing a positive response from the industry at a time when UK homeowners are starting to feel the pinch. However, the move earlier this week to remove certain mortgage tracker products by some in the industry appears to have been swept under the carpet for now. As with so many of these major decisions with regards to mortgage rates the proof is in the pudding and it is hoped there will be no tinkering with deposit rates in order to effectively exclude first-time buyers from these improved rates.

The Council of mortgage lenders has warned the UK government that concerted pressure in relation to base rate cuts is in many ways unfair as the banks deal at the LIBOR rate which has fallen but by nowhere near the same amount as UK base rates.

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