Gordon Brown urges banks to pass on interest rate cut

Pressure is mounting on banks to pass on the full benefits of the interest rate cut. The Government is urging all banks and building societies to help their customers after only a handful of lenders said they would pass on Thursday's 1 per cent reduction in full. However, a Cabinet minister has admitted the Government cannot force banks to pass on the rate cut. Health Secretary Alan Johnson said: "No, we can't force banks to pass it on. We do expect - and certainly that's the whole premise of the Bank of England's decision to bring interest rates down to 2 per cent - that that will be passed on. "Certainly, consumers will be looking very carefully as to who's passed it on and who hasn't." The dramatic percentage point cut left the cost of borrowing at 2 per cent - a level not seen since 1951 and equal to the all-time record low in the UK. The European Central Bank also cut the eurozone rate from 3.25 per cent to 2.5 per cent. HSBC, Nationwide, Halifax, Lloyds TSB, Barclays' lending arm the Woolwich and Bristol & West all said they would be reducing their standard variable rate (SVR) by at least the full 1 per cent, while other lenders continued to keep their rates under review. The Halifax move followed speculation that City watchdog the Financial Services Authority could force the group to pass on the cut. If lenders pass on the rate cut in full, people with a £150,000 mortgage will save around £85 a month, while those with a £250,000 one will be £142 a month better off.

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ITN | December 5, 2008

Tags:. .eurozone. .tsb. .variable. .watchdog. .svr