Base Rate Cut - Part 2

Following on from my post yesterday, the Telegraph is reporting that both Abbey and Nationwide have said they will not be passing on the half point drop in interest rates on to customers.

No building societies at all have offered customers any reductions in their borrowing costs, according to Moneyfacts.

Gordon Brown will be angered by the refusal to cut rates as he has publicly called for consumers to benefit from reductions in the base rate.

Part of the reason for lender's reluctance to pass on the reduction is that three month Libor - the rate which lenders use to price many of their mortgages - remains high, reflecting the lack of willingness among banks to lend to one another. Three month Libor rose slightly yesterday to 6.28 per cent.

Andrew Montlake, of Cobalt Capital, a mortgage broker, said: "Many lenders are showing their true colours right now. The Government has effectively bailed out the banking sector but some of the banks, by withdrawing their more competitive products or upping their tracker rates, are refusing to bail out existing homeowners and first-time buyers.

"For certain lenders, profits are clearly more important than the man on the street."

I anticipate big trouble ahead for banks and building societies from both politicians and the public if they are seen to take public funds for their own benefit and do nothing to help out their many struggling mortgage customers.