The nationalised bank Northern Rock has joined other lenders in passing on the Bank of England's interest rate cut - but not in full.
Mortgage customers at government-owned Northern Rock will see a 0.25 percent cut in interest rates, leaving its standard variable rate (SVR) at 5.09 percent, the bank has announced.
The move follows the Bank of England's cut last week of 0.5 percent, which left its base rate at its lowest-ever value of 1.5 percent. Northern Rock said it had "given careful consideration to all of its customers" in deciding how much of the cut to pass on. Typically, a lower base rate - if passed on by high street banks - will benefit mortgage holders but penalise savers.
Northern Rock joins Halifax and RBS/NatWest in passing on half of the reduction, while HSBC, Lloyds TSB and Nationwide have all lowered their rate by the full amount. Fellow nationalised bank Bradford & Bingley has yet to announce its decision.
The Bank of England's Monetary Policy Committee (MPC) has been trying to boost lending as the full effects of the credit crunch have taken hold on the country's economy. This has led to a reduction of 3.5 percent since October, when the rate stood at five percent. Many analysts have predicted that the rate will reach near-zero in the coming months, similar to the situation in the USA.
In this time, Northern Rock has cut its SVR by 2.4 percent, while Lloyds TSB has passed on all of the reductions in full.
