Lenders fail to pass on rate cut to borrowers

After the Bank of England's interest rate cut earlier this month, many lenders have not reduced their rates on mortgages at all.

More than 50 per cent of all mortgage lenders have failed to pass on the Bank of England's (BoE) August rate cut to borrowers.

Moneyfacts said currently only 58 per cent of 120 lenders have actually passed on the 0.25 per cent point cut, made earlier this month.

Some financial institutions are claiming that passing on the rate decrease is not necessary because they did not increase rates with the BoE in the past.

However, many are still undecided about implementing the reduction.

Ray Boulger the technical director at mortgage advice firm Charcol told BBC News borrowers should not hold their breath.

"How these things usually work is that if the lender is going to pass on the full cut they announce so fairly quickly," he said.

"Any delay in an announcement raises suspicions as to whether the full cut is going to be passed on."

The reduction by the Bank's Monetary Policy Committee (MPC) from 4.75 per cent to 4.5 per cent, was the first cut in nearly two years.