Base rate cut one month on: which mortgage lenders have reduced rates?


One month on from the to begin the Bank of England’s emergency cuts towards the base rate, the mortgage market looks completely different.

Which? research has found that the number of deals available has fallen by nearly 50%, plus some lenders are yet to pass the base rate saving on in full for their customers.

With 140,000 mortgages estimated to mature in April, worth a total of lb20.9bn, lots of people is going to be searching for any new deal.

Here, we explain which banks have cut their rates and the reason why you might find it more difficult to remortgage in the present climate.

Mortgage deals drop after the base rate cut

In March, the Bank of England cut the bottom rate twice, from 0.75% to 0.25% on 11 March, and then towards the historic low of 0.1% on 19 March – an overall drop of 0.65% in eight days.

In the month since the first drop, banks have significantly cut the number of mortgages open to borrowers.

Data from Moneyfacts shows that the number of deals available on the market has fallen from 5,239 to 2,750 – a small amount of 48%.

There are several allies:

  • The government’s introduction of three-month mortgage payment holidays has meant lenders have required to divert their resources to helping existing customers.
  • The dramatic drop in the base rate has led to banks withdrawing tracker mortgages.
  • The government’s stay-at-home measures mean lenders can’t undertake in-person mortgage valuations, so might be shying away from ‘riskier’ loans.

Have banks passed on the base rate change?

The base rate governs the price of borrowing for banks, then when it drops we would hope to check this out passed on to customers by means of a decrease in the lender’s standard variable rate (SVR).

The SVR is the rate your mortgage moves onto after your fixed term should you don’t change to another deal.

Banks have generally been proactive. Of the 10 biggest UK lenders, only Coventry Building Society (0.5%) and Yorkshire Building Society (0.5%) failed to pass around the full 0.65% reduction to customers so far.

The table shows which banks and building societies have cut their SVRs since 11 March.

Which lenders have failed to cut their rates?

The following lenders have to date failed to make cuts for their SVR since 11 March.

Many lenders about this list are smaller building societies that may still be reviewing changes, so even though they haven’t reduced their SVRs yet, there’s no guarantee they won’t within the coming weeks.

What does this mean for people remortgaging?

If you’re visiting no more your fixed term in the next couple of months, you may be wondering how this affects your remortgaging options, whether you’re changing lender or moving to a different cope with your present bank (referred to as a product transfer).

What basically can’t switch over time?

Earlier now, we spoke to some Which? reader who is in the process of switching their mortgage to First Direct. They received an e-mail proclaiming that there could be a delay in processing the switch and that First Direct ‘cannot guarantee any requested completion dates’.

The lender said that, in addition to any staffing issues, it ‘[relies] on more events to complete your remortgage and in addition they may experience issues. We cannot be held responsible for any costs or expenses incurred as a result of any delay, as these circumstances are outside of our control.'

Which? approached First Direct with this concerns this policy could cause borrowers lapsing onto SVRs through no fault that belongs to them.

A spokesperson told us: ‘Our standard successful contact strategy with customers approaching maturity remains in position and the majority of these complete their product switch online.

‘While First Direct isn't responsible for the actions of its third-party suppliers, there's an excellent relationship with them and work together to ensure we provide the best possible plan to our customers, ensuring any issues are prioritised and resolved appropriately.’

Remortgaging: what the banks say about delays

It’s feasible that lots of banks could face processing delays and staff shortages, because of the impact of coronavirus, therefore if your mortgage is maturing within the next few months, it’s important to get ahead of the game and switch early.

We asked the UK’s 10 biggest lenders when they could provide assurances that customers wouldn’t be left footing the balance if your remortgage took more than expected.

In response, most lenders told us that product transfers can be submitted online, but none spoke specifically about customers switching from another lender.

Their responses are summarised below. Barclays didn't respond to our inquiries.

  • Lloyds Banking Group (includes Lloyds Bank/Halifax/Bank of Scotland): Currently experiencing a higher amount of calls than normal. Customers can conduct product transfers online or request a callback. Customers seeking to switch should get in touch before the month their mortgage matures.
  • Royal Bank of Scotland/Natwest: Writes to customers three months prior to the end of the fixed term. Remortgaging products available over the telephone or online. Most customers renew online.
  • Nationwide: Many members choose to switch online. Average phone waiting here we are at remortgage customers was 2 to 3 minutes in March, and make contact with appointments can be found within 24 to Two days. Writes to customers well ahead of time of mortgage maturing.
  • Santander: Customers can switch deals online up to four months before their current mortgage matures. If the new rate of interest is gloomier, they will be switched immediately without early repayment charges.
  • HSBC: Continuing to make contact with customers with mortgages approaching maturity. Majority of customers complete product transfers online.
  • Coventry Building Society: Call volumes are higher than usual but many customers can get same-day advice or an appointment within 48 hours.
  • Virgin Money: All customers can continue to remortgage, regardless of their loan-to-value (LTV) level. Customers can apply for any new deal online. Informs customers 4 months before maturity and it has specialist teams for remortgaging and product transfers.
  • Yorkshire Building Society: Only taking applications for remortgages up to 85% LTV, as valuers are unable to visit properties. No lending on new-build homes, flats or properties valued above lb1m. Customers can switch 4 months before maturity online or over the telephone.
  • TSB: Customers can switch 3 months before their deal expires. If your customer's switch continues to be delayed through no fault of their own, TSB will consider backdating the new rate of interest.

Will banks relaunch their deals?

The good news for people looking to remortgage would be that the best rates have remained largely unchanged previously couple weeks, despite the number of available deals being cut in half.

And more products could soon go back to the marketplace, based on Moneyfacts.

Eleanor Williams of Moneyfacts says: ‘We are beginning to see early indications that lenders may be starting to consider launching new products again, with providers for example Barclays and Halifax via intermediaries taking those first steps. Hopefully that we may soon see others follow suit.

‘The average SVR is now 4.67% and the average two-year fixed mortgage rate has reduced to two.21%, therefore the benefit of switching to a different deal while rates are low is evident for those eligible and would protect these customers from interest rate volatility later on.’

Which? Money Podcast: coronavirus and mortgages

On last week’s Which? Money Podcast, we discussed loan payment holidays, house prices and moving during the coronavirus lockdown.

You can pay attention to the full discussion below (from 18 minutes).

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Our experts have been compiling the advice you need to stay safe, and also to make certain you aren't excluded from pocket.

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