More than three-quarters of lenders have failed to pass on any of the Bank of England's half-point cut in interest rates, despite further falls in interbank lending rates, it was revealed yesterday.
Britain's biggest bank HSBC is one of a number of banks and building societies yet to offer standard variable rate (SVR) borrowers any reductions since the base-rate move, according to financial information firm Moneyfacts.
And a raft of high stre
et mortgage giants that have trimmed their SVRs have not passed on the full 0.5 per cent in line with the Bank's base rate cut to 4.5 per cent earlier this month.
Alliance & Leicester became one of the last of the big mortgage providers to announce it was reducing its SVR, although only by 0.25 per cent as it said wholesale money market costs remained stubbornly high.
Yesterday's money market figures showed that the key three-month London Interbank Lending Rate (Libor) – used in pricing mortgages – had fallen back for the seventh straight day.
The latest figures from the British Bankers Association showed that the three-month Libor now sits at 6.09 per cent, down again after yesterday's drop to 6.12 per cent.
But Alliance & Leicester said it had not yet fallen far enough or quick enough.
"Libor has started moving in the right direction, but it needs to go down further and it's too early to start having an impact on our rates," said a spokeswoman.
Some lenders are even increasing the rates on the tracker mortgages to new customers, with Lloyds TSB and Barclays' lender Woolwich last week upping the interest charged to limit new business in the face of high wholesale funding costs.
The Government's dramatic bank rescue efforts and the shock cut in interest rates have begun to help banks regain confidence to start lending to one another.
However, Libor still remains well above the 4.5 per cent Bank of England base rate in spite of the recent easing back.
Before the credit crunch, three-month lending rates stood around 10 to 15 basis points above base rate, while overnight rates should be virtually the same as official rates.
Yesterday's figures showed that overnight lending figures had fallen to 4.75 per cent from 4.77 per cent on Monday, although it is more volatile and had seen sharp declines last week, they fell as low as 4.69 per cent at one stage.
Six-month interbank lending rates also eased today, down from 6.23 to 6.2 per cent.
