Weather: Hi 8°C / Lo 4°C
Ulster Bank customers will not get full interest rate cut
Saturday, 6 December 2008
Print
Email
One of Northern Ireland’s biggest banks last night decided to pass on the Bank of England’s latest interest rate to its standard variable rate customers — but not by the full 1%.
Ulster Bank followed the lead set by Bank of Ireland when it announced yesterday it had decided to reduce its Standard Variable Rate (SVR) mortgage rates.
All of Northern Ireland’s ‘big four’ banks agreed to pass the full 1% cut on to their tracker mortgage customers immediately after the Bank of England cut the base interest rate by 1% to stand at 2% on Thursday, a level not seen since 1951.
Bank of Ireland immediately agreed to also ease pressure on its SVR customers — leaving Ulster Bank, First Trust and Northern Bank reviewing whether they would follow suit.
Unlike trackers, SVR lending is not automatically tied to interest rate cuts.
As Prime Minister Gordon Brown and his Chancellor Alistair Darling yesterday urged banks to share the cut in in full, Ulster Bank announced it would reduce its SVR by 0.75%, from 5.42% to 4.67%.
“This move reflects the increased cost of money being experienced throughout the banking sector. All rates will be effective by January 1st 2009,” it said in a statement.
Six of the top 10 lenders have now said they will be passing on at least some of the cut
“All customers affected will be made aware of the change and its impact on their monthly payments.”
The bank highlighted that it also needs to assess the impact of a rates cut on its savers as well as borrowers.
Both Ulster Bank tracker and SVR mortgage customers benefited from the 1.5% cut last month and a 0.5% cut in October. First Trust and Northern Bank are both still reviewing whether to include SVR customers in the rates cut.
Six of the top 10 lenders have now said they will be passing on at least some of the reduction to their SVR customers.
HSBC, Lloyds TSB, and Barclays' lending arm the Woolwich all said they would be reducing their SVR by at least the full 1%, while Nationwide is passing on 0.69% of the cut and Britain's biggest mortgage lender Halifax is shaving 0.25% off its SVR.
The announcements came as the Government continued to put pressure on the banks to pass on yesterday's 1% reduction to homeowners and businesses.
Chancellor Alistair Darling made a fresh appeal to banks to pass on the new rates to help individuals and businesses, urging them to “stick to their side of the deal”.
Shadow chancellor George Osborne said the reluctance of banks to pass on the interest rate cut to customers showed the Government's recapitalisation was not working.
Post a comment
Limit: 500 characters
View all comments that have been posted about this article
Offensive or abusive comments will be removed and your IP address logged and may be used to prevent further submissions. In submitting a comment to the site, you agree to be bound by BelfastTelegraph.co.uk's Terms of Use.
Posts submitted in UPPERCASE letters will be rejected.
.
To those who suggested that I was taking a 'silly approach' when I suggested changing banks I thoroughly disagree with you. The bank is there to provide a service just the same as any store / restaurant should. If a store / restaurant did not provide me with proper service i would not be back near them, so WHAT is the difference with a bank?
Posted by CannuckCol | 10.12.08, 04:02 GMT
Their customers may not have much to save, if they don't play fair.
Posted by Stuart | 07.12.08, 20:55 GMT
well their not the only ones northern rock only cut my mortgage by 1/2% thelast time when the others cut by1.5% and this time ther giving nothing voting on your feet is onehing but wee do you go? banks have us all by the ----s nd nothing will ever change.
Posted by michael | 07.12.08, 19:34 GMT
I am disgusted at the Ulster Bank not passing on the full rate cut.
Well UB say goodbye to my account which has never been in the red.
Posted by S Dickson | 07.12.08, 19:26 GMT
ConnuckCol, I think this is a rather silly approach to take, by moving your money to another bank, then you will get less interest!! Thus the better approach to take would be actually to move money INTO an Ulster Bank account to take advantage of the higher rate of savings.. Duuh
Posted by David A | 07.12.08, 17:17 GMT
I understand the misery and difficulties of borrowers, but Soarer hit the point: savers have the same rights, and most of them are ordinary people saving for their pensions, or their children's education. I don't particularly like the way banks behave here in UK but, I have to say, in these times it is wise to move cautiously, and they are just being cautious to avoid following Northern Rock into the abyss. Bear in mind that borrowers are the banks' best clients, and banks would do their best to keep them in track: they don't want an empty house they would sell at auctions for a fraction of its value, they want clients able to pay their mortgages.
Posted by littlesaver | 07.12.08, 16:51 GMT
Well, my mortgage has dropped and I never thought it would so anything else I get is a bonus. And for those talking about moving, what other bank really wants new debt !! So if it helps save the bank and gives the savers a few pounds good luck to them.
Plus I have to say in reply to Scrooge that the staff are certainly worth a night out, it can't be much fun listening to us lot grumbling every time we come in ;)
Posted by Purse Strings | 07.12.08, 15:15 GMT
To be fair they are in rather a difficult situation. They have to look after savers as well as borrowers.
Posted by soarer | 07.12.08, 11:02 GMT
CannuckCol, with the greatest respect, I do not think that the people who are negatively affected by this interest rate cut HAVE much money to move to another account. I agree 10% with you that people should vote with their feet (or their wallets) and take their custom elsewhere.
I really think this is going to hit those who are in debt to Ulster bank - which is where they make most of their money.
Posted by Centaur | 07.12.08, 01:42 GMT
I suggest we all close our Ulster Bank accounts????...
Posted by Robb | 06.12.08, 16:24 GMT
What the customers want to do now then is lift their money out of this bank and move to another. Show their disgust with appropriate action.
Posted by CannuckCol | 06.12.08, 14:33 GMT
Meanwhile Ulster Bank Christmas Staff Parties are being subsidised £40 per head by the Bank!
Posted by Scrooge | 06.12.08, 12:33 GMT