Banks outline how base rate cut will affect customers

March 20, 2020 4:29:16 PM

Banks have started to outline what impact Thursday’s base rate cut will have on their customers.

Two emergency rate cuts by the Bank of England within days of each other have pushed the base rate to a new low of 0.1%.

The rate cut means some borrowers on variable mortgage rates will see their payments reduce.

But savers could see their returns chopped further, depending on what providers decide to do.

Bank of England
The Bank of England has slashed interest rates to 0.1% (Kirsty O’Connor/PA)

HSBC UK said there will be no changes to its current range of savings products, although these are under review.

HSBC UK is further reducing its variable rate mortgages. Rate cuts include lowering its standard variable rates (SVRs) by 0.15% alongside all on-sale and off-sale tracker rates reducing by 0.15%.

The changes mean HSBC UK’s residential SVR will reduce from 3.69% to 3.54%.

HSBC UK’s buy-to-let SVR is being cut from 4.75% to 4.60%.

Michelle Andrews, HSBC UK’s head of buying a home, said: “Reducing the rate of our SVR and tracker rate mortgages will provide additional relief for those on variable rate mortgages.”

Santander also said it would be passing on the full rate cut to its SVRs and its mortgages which directly track the base rate.

The bank’s SVRs will reduce to 4.34% in May.

Santander is reviewing the pricing of its variable rate savings products and said it will communicate any product changes to customers in line with their terms and conditions.

The Co-operative Bank said its mortgage SVR will reduce by 0.15 percentage points as a result of the most recent rate cut, alongside reductions to tracker mortgage rates.

The bank is still reviewing its savings rates and said it will communicate any changes to customers in due course.

Metro Bank said it is also still finalising a decision on its savings rates.

A Metro Bank spokesman said: “Following the Bank of England’s announcement that it has reduced the base rate to 0.1% from 0.25%, Metro Bank will reduce its standard variable rate for mortgages in line with this, effective from April 1 2020.

“This 0.15% reduction will be applied in addition to the 0.5% already announced after the Bank of England’s initial base rate cut, resulting in a 0.65% reduction from current rates.

“Products that are linked to the Bank of England base rate have already been reduced. We are currently reviewing our variable interest rate savings products and will update customers in due course.”