Lenders refuse to reduce mortgage rates months after the Bank of England cut interest rates

A fifth of banks and building societies are refusing to reduce mortgage rates four months after the Bank of England interest rate cut.

In August the Bank slashed rates — for the first time in seven years — to a record low of 0.25 per cent following the EU referendum.

Most major lenders responded by lowering standard variable rates on their mortgages.

This is the rate you pay when your fixed-rate deal expires. But 17 out of 80 banks and building societies are still yet to do so, according to data firm Moneyfacts.

This means thousands of borrowers may be paying over the odds on their home loan.

Most are small lenders such as West Bromwich and Newcastle Building Society. First Direct is the only bank not to cut its rates.

A spokesman for First Direct says this is because, at 3.69 per cent, it already has one of the lowest variable rates on the market.

On a typical £150,000 mortgage, monthly repayments would work out at £766.

West Brom BS says it also already has a low rate at 3.99 per cent. Newcastle BS, however, charges a higher 5.99 per cent or £966 a month.

A spokeswoman for Newcastle BS says: ‘As a member society we need to balance the interests of savers and borrowers.’

Hilary McVitty, of the Building Societies Association, says: ‘Standard variable rates are not just linked to base rate and could be influenced by many factors.’

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Written by: Houseladder