April's Base Rate cut fails to reach full market

Five weeks after the last Base Rate cut, 24 lenders (25% of the market) have still not announced whether they will pass on the change to their Standard Variable Rate (SVR), according to Moneyfacts.

Research from the financial comparison site also showed that of those lenders that have passed on the cut, 20 (28%) have lowered their SVR by less than 0.25% - the cut made by the Monetary Policy Committee in April.

According to Moneyfacts’ research, the majority of lenders who haven’t passed on the cut, or have passed on less than 0.25% are building societies, with 18 (38%) of the 51 societies that offer mortgages still not declaring their intentions regarding any rate cuts and another 18 (38%) announcing cuts of less than 0.25%.

Michelle Slade, analyst at Moneyfacts, said some lenders’ SVRs are now running at similar levels to the rest of their mortgage range, while in some cases products rates are actually higher than the SVR. Lenders including ING Direct, Halifax, Lloyds TSB and Nationwide have stopped offering their SVR rate to new customers.

In addition, lenders continue to require larger deposits than in recent years and the volume of products available has continued to drop. Slade explained that lenders are still reluctant to take on borrowers regarded as “risky”, that is, those who do not have enough equity in their home or a substantial deposit.

“Just prior to the credit crunch in August 2007, 47% of deals required a deposit of 5% or less. Today only 12% of the deals on the market will accept a deposit that small. 53% of the market now requires a deposit of more than 10%, compared with 27% in August 2007. This is most concerning for first-time buyers or anyone with limited equity in their home,” she continued.

“The total number of mortgages available has been reasonably constant over the last few weeks, but recent product withdrawals by the likes of Northern Rock have seen the number drop to the lowest level we have seen in quite some time.”

According to Moneyfacts, there are now 3,847 mortgage products available (including residential, sub prime and buy to let), compared to 4.054 a month ago. 7.931 in January 2008 and 15,599 in July 2007.

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