Cumberland Building Society slashes mortgage rates from Monday
Last updated 11:56, Wednesday, 26 November 2008
The Cumberland Building Society is cutting its mortgage rate by 1.1 per cent with effect from December 1.
The move follows a 1.5 per cent cut in the Bank of England’s base rate announced on November 6.
It will save a borrower with a £50,000 interest-only mortgage nearly £46 a month. Those on a £100,000 interest-only mortgage will save around £92 a month.
Some lenders – including Abbey, HBoS, Lloyds TSB, Nationwide and RBS – passed on the full 1.5 per cent cut.
The Cumberland’s deputy chief executive, John Leveson, said the society had thought carefully before deciding not to follow suit.
The Cumberland is also reducing the interest rates on its savings accounts but in many cases the fall will be less than 1.1 per cent.
Mr Leveson said: “We are mindful of the impact such a significant reduction in the base rate could have on our savers, many of whom are retired and rely on income from their savings account.
“We have endeavoured to maintain a balance between savers and borrowers and provide long-term value to all our members.”
Carlisle MP Eric Martlew had called on the Cumberland to pass on the full 1.5 per cent cut in the base rate.
He said today: “I accept that the Cumberland is competitive. But they have to explain to their borrowers in detail why this is the second time they haven’t passed on the full cut in the base rate.
“What we should be getting is assurances that, if the rate is cut again, the full amount will be passed on.”
Mr Martlew added: “There is stagnation in the housing market. One way to get the market moving is people being able to borrow money at a lower rate of interest.”
The Cumberland is Cumbria’s largest mortgage lender with 20,000 borrowers. It has around 140,000 savers. Only borrowers with variable-rate mortgages will receive the 1.1 per cent cut.
Those on fixed-rate deals are not affected while those with tracker mortgages automatically get the full 1.5 per cent base-rate cut.
The Cumberland’s new standard variable mortgage rate is 5.14 per cent. Mr Leveson said that was lower than most high-street banks and all but one of the UK’s top 20 building societies. He added: “Most of our borrowers with variable-rate mortgages also benefit from an additional [loyalty] discount below the standard variable rate.”
They and all Building Societies should pass on the rate cuts immediatley - Most new home owners now, unlike older borrowers may rememeber struggles as rate peaked at nearly 17% in 70's and high interest returns for savers (to get funds...)such as pensioners who now like myself (pensioned) get very little and present Government wants people to spend (hence fewer funds) and not save ... However, I did get a Parker Biro pen when given financial advice after redundancy was 'pay your Cumberland (CBS)mortgage off' thinking it would release money for somebody needing a 'home'. We have always had bill hikes (ie rates etc) but recent fuel hikes put figures probally on par with 70's for people's outgoings so rates should be cut for benefits to anyone struggling...
View all comments on this article
Have your say
You're right about the existing borrower discount, it's gone down so the overall rate cut isnt 1.5% But all my savings rate have been cut by the full 1.5%
Posted by Alan Brown on 3 December 2008 kl. 13:02