Banks told to pass on rate cut
Updated on 07 November 2008
Chancellor Alistair Darling told banking chiefs to pass on the interest rate cut to customers "as quickly as possible", according to sources.
The heads of all high street lenders were summoned to a breakfast meeting at the Treasury at which they were urged to drop mortgage rates.
It follows the shock move by the Bank of England on Thursday to slash the bank base rate by 1.5% to 3% - the lowest it has been in more than 50 years.
The meeting comes amid growing calls for banks to pass on the good news to mortgage holders with immediate effect.
The Conservative Party has urged the Government to force nationalised banks - Northern Rock and Bradford & Bingley - to lower their rates.
On GMTV, Tory leader David Cameron said: "The interest rate should be passed on. If they do not, further action may be necessary." He added: "The Government owns some of these banks now, so they can take steps."
A host of banks and building societies rushed to withdraw their tracker deals from the market following Thursday's decision.
Lloyds TSB and Abbey are the only lenders to drop their standard variable rates.
Others appear wary of committing themselves to interest rate cuts while the Libor (London Interbank Offered Rate) - the rate at which banks lend to each other - remains high and with a recession just around the corner.
On Friday Halifax, the UK's largest mortgage lender, said it was still considering its options. Nationwide, the biggest building society, said it was "monitoring the markets" before making a decision.
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