Banks agree to pass on rate cut

Some of the largest mortgage lenders in Britain have said they will pass on the 1.5 per cent cut that the Bank of England made to the base rate yesterday.

Abbey has announced the cut will be applied across its entire mortgages range, including standard variable rate, tracker and flexible offset mortgages.

Halifax will instigate the reduction with effect from December 1st and Royal Bank of Scotland (RBS) also stated it will apply the change.

In its statement, RBS said the cut was also being applied because interbank lending rates are coming down.

Such moves may help boost the property market with mortgages becoming much cheaper.

First-time buyers may be among those who benefit most from this situation.

The cut made by the Bank yesterday was the biggest the base rate has seen since 1981 when the government lowered it by two per cent.