Credit crunch makes its mark on base rate reduction

The surprise 0.25 per cent reduction in the base rate in December saw a mixed reaction from providers, according to Lisa Taylor, analyst at Moneyfacts.co.uk.

For those of you Interested in savings accounts, 12 providers have announced rate reductions across their entire variable rate range, four have amended the majority of products while a further 11 have amended at least one of their accounts (typically those linked to base rate). Most changes tend to be the full 0.25 per cent reduction while Heritable bucks the trend, raising its rates by up to 0.20 per cent.

Find a best-buy savings account

“Compared with July and May rate rises, where 20 and 24 providers respectively announced rate changes within the first week, with only 12 so far, this is surprisingly slow,” said Taylor. “Typically we may expect savers to see their rates cut faster than they rise, but so far this is certainly not the case.”

Out of all the mortgage lenders in the country, 31 providers have announced changes to their standard variable rate (SVR), while six providers have reduced their SVR by less than the 0.25 per cent base rate reduction.

Find a new mortgage here

Some of the larger lenders - Abbey, Cheltenham & Gloucester, Halifax, Nationwide, NatWest / Royal Bank of Scotland and Woolwich - were the fastest to react

“Mortgage rates have moved at a similar pace to the last two rate increases in July and May [2007], where we saw 31 and 37 announcements within the first week. But compare this to the last time we saw rates fall back in August 2005, where 46 lenders had made an announcement; the rate of change now appears to be relatively slow.”

It is good to see, however, that with the exception of six of the rate changes, the remainder have been the full 0.25 per cent reduction.

• Delicious
• Digg
• reddit
• Facebook
• StumbleUpon

Sign up for free news e-mailer

House price search

Enter your postcode here to find out how much your property is worth, based on Land Registry data.