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Banks set out response to reduction in base rate

Published 04/08/2016

Santander said all mortgage products linked to the base rate will move in line with the reduction
Santander said all mortgage products linked to the base rate will move in line with the reduction

Banks and building societies have set out the different ways in which they plan to pass on the cut to the base rate to customers - which could mean the axe hanging over some savers' returns as well as some borrowers seeing their rates chopped.

Here is what they have said:

:: Santander. All Santander's mortgage products linked to the base rate will move in line with the reduction, in accordance with the terms of the deal.

From September, it will pass on the reduction to customers on a standard variable rate (SVR) mortgage "in full".

Santander is also reviewing its current account interest rates. The bank recently declined to comment on reports from the Daily Mail's Money Mail that it is considering cutting the rate on its popular 123 current account from 3% to 2%.

It said rates on existing savings accounts will not be reduced by more than 0.25%.

:: Barclays. C ustomers with base rate tracker mortgages and customers on the Barclays SVR will see rates reduce by 0.25 points. The changes will start from September for existing customers.

Barclays also said savings rates are under review and customers will be contacted once a decision is made.

:: HSBC. From Friday, HSBC will reduce all its base rate linked tracker mortgage rates.

It said: "Neither our SVR nor our savings rates are directly linked to base rate, however in light of the Bank of England's decision we are currently reviewing our SVR and savings rates across our range and will notify our customers of any changes in due course."

:: Lloyds Banking Group (includes Halifax, Lloyds Bank and Bank of Scotland brands). A ll variable rate products that track the Bank of England base rate will be reduced by 0.25 points from September.

A spokesman said: " The Bank of England base rate is only one of a number of factors that we take into account when reviewing interest rates.

"The 0.25% reduction will form part of the ongoing rate reviews across our product ranges."

:: RBS/NatWest. These banks are reviewing whether they will make any changes to variable rate products.

They said: "For those customers on base rate linked products, we will reduce their rate by 0.25%."

:: Nationwide Building Society. Nationwide will pass on the decrease to existing base mortgage rate, standard mortgage rate and tracker mortgage customers.

No savings customers on variable rates will see a reduction of more than 0.25%. The Flexclusive Regular Saver, at 5%, the FlexOne Regular Saver at 3.5% and the Help to Buy Isa at 2% will be protected at current rates.

:: TSB. The bank is reviewing its rates and will make a further announcement shortly. It said: "We understand that for many customers, this will be the first time they have experienced a rate change and we will be on hand to provide support."

:: Yorkshire Building Society (includes the brands Yorkshire Building Society, Norwich and Peterborough Building Society, Chelsea Building Society and Accord Mortgages). The building society said customers with tracker rate mortgages will see their interest rate adjusted accordingly, "subject to minimum rate conditions".

It is reviewing variable savings rates in the coming days, as well as reviewing SVRs across its brands.

:: Virgin Money. It will impose a 0.25 point cut to its SVR from September 1. It said its savings rates will remain competitive.

:: Coventry Building Society. Variable mortgage rates will reduce by 0.25% from September. Coventry is reviewing variable savings rates and will announce any changes no later than August 12.

:: Post Office. It said it will "continue to monitor market conditions and make any changes necessary at the appropriate time".

:: Clydesdale Bank and Yorkshire Bank. The banks said they will pass on the changes in line with the terms and conditions of their products and continue to monitor the market closely before making any further decisions.

:: Skipton Building Society. If customers have a base rate tracker mortgage, their interest rate will change in line with the base rate - but if their product has a "rate floor" the rate will not go below this level.

:: The Co-operative Bank. The Co-op is reviewing the rates it offers to mortgage and savings customers and said it will communicate with customers "in due course".

Co-op customers with tracker mortgages will see their rate fall in line with the base rate, unless their product has a floored rate, in which case the rate will not fall below the rate stated in the product terms and conditions.

It said: "We are still considering the position for customers with standard variable rate mortgage and variable savings products to ensure we balance the needs of our savers and borrowers."

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