Base rate cut not passed on by three quarter of lenders

"With mortgage approvals falling to rock bottom levels and house values continuing to fall to unseen troughs, it is unlikely that mortgage lenders will soon regain their appetite to lend at reasonable levels in the short term. Unfortunately, within this increasing turmoil, the majority of customers currently have no alternative but to switch to their lender's standard variable rate (SVR)

"Some lenders have announced a reduction in their SVR and have reduced their rate by the full amount. However, a growing number have chosen not to do this and only passed on a proportion of the cut or none at all.

"At the crest of the mortgage market wave, it was likely that only households with a small outstanding mortgage balance, those negotiating their next new deal or those that just simply fell through the advisory net would have seen themselves paying a SVR. A mortgage that was previously known as only a revert rate, due to circumstances, has become a prime product that could be adversely priced at will.

"Historically, lenders have toed the line in passing on favourable changes to their SVR, but as there have been few base rate changes of late, lenders have had little opportunity to reprice their SVRs to incorporate an increased probability of default, elevated risk and the higher cost of interbank lending.

"With more base rate cuts on the horizon, which in part are intended to reduce the burden of household finances, we could find ourselves in situation where future MPC decisions on a rate cut will have little or no bearing on the majority of current household's mortgage outgoings and could ultimately result in an increase in repossessions."

Highest SVRs (No = unchanged since last base rate cut):

Kent Reliance BS - 7.59% - No

PI - 7.50% - No

Catholic BS - 7.40% - No

Darlington BS - 7.37% - No

Source: 21.10.08

And some of those who have cut by less than 0.50% (first figure is cut)

HSBC - 0.00% - 6.25%

Northern Rock - 0.15% - 7.34%

Beverley BS - 0.20% - 6.20%

Nationwide BS - 0.30% - 6.19%

Source: 21.10.08