The Government-owned bank Northern Rock has failed to pass on the Bank of England's latest interest rate cut.
Customers at the nationalised lender Northern Rock will not see the Bank of England's latest interest rate reduction in their variable mortgage rate - despite the government asking other banks to pass on the cut.
The Bank of England lowered its base rate by one percent last week, leaving it at two percent - its lowest value since 1951. This was widely seen as an effort to boost the economy by lowering mortgage interest repayments and both the prime minister and the chancellor said lenders should pass the cut on to their variable-rate customers.
However, it has now emerged that Northern Rock has cut its standard variable rate by just 0.5 percent, meaning it will be at 5.34 percent from the start of next year. The bank had said that it had "given careful consideration to both borrowers and savers", and that its savings customers would now see big cuts in their rates.
But Melanie Bien, the director of broker firm Savills Private Finance, told the Times: "Other lenders may reasonably question why they should bow to government pressure to pass on the full one percentage point. Northern Rock really needs to lead by example if the government is going to have any joy in persuading other lenders to play ball."
