Bank Of England Slashes Interest Rates

The UK's largest mortgage lenders have vowed to pass on the interest rate cut in full following pressure from Chancellor Alistair Darling.

A flurry of banks and building societies said they were to drop rates by 1.5% after the Bank of England slashed the base rate on Thursday 6th November in a shock move that surprised many.

The move by the banks came after industry chiefs were dragged in front of the Chancellor and told they must pass on the cut "as soon as possible".

Among the first to pledge the cut would be passed on to struggling consumers were Halifax and Nationwide, respectively the UK's largest lender and building society. Both announced that their standard variable rates would be dropped in line with the Bank of England's announcement.

They were joined by Lloyds TSB and Abbey, both of which have pledged to drop their rates by 1.5%. Royal Bank of Scotland and Scottish Widows also announced that they were to reduce the cost of their mortgages. Later, Nationalised banks Northern Rock and Bradford and Bingley also said they were passing on the full interest rate cut to its mortgage customers.

The Bank of England's decision on Thursday to slash the bank base rate by 1.5% to 3% - the lowest it has been in more than 50 years has been welcomed by many as the average householder should see monthly repayments on mortgages significantly reduced.

Homeowners with a £250,000 mortgage should see savings of £230 per month and those with a £150,000 mortgage seeing savings of £138 per month