05/02/2009

Three NI Banks Cut Interest Rates

Most of Northern Ireland's big banks have agreed to adopt the latest UK interest rate cut.

First Trust, Bank of Ireland and Ulster Bank have all brought their base rates into line with the reduction.

The Bank of Ireland and Ulster Bank both said they were reviewing how the cut would affect standard variable rate products.

The UK's Monetary Policy Committee decision follows the International Monetary Fund predictions that Britain will suffer more than any other advanced nation in the worst global recession since the Second World War.

In a statement accompanying the decision, the bank said the global economy was in the throes of "a severe and synchronised downturn".

Lloyds TSB - which also lends under the Cheltenham & Gloucester brand - Halifax, Nationwide and Bacrclays' lending arm the Woolwich are all reducing their standard variable rate (SVR) by 0.5%.

Four million homeowners will benefit from the cuts, including those with people on tracker mortgage deals, which move up and down in line with the base rate.
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Those on SVRs with lenders who have agreed to pass on the rate will also welcome the news.

However, around 300,000 will not see their monthly repayments fail, as they have "collars" on their loans, meaning the rate increases would not drop further.

The news has however, been criticised by many, including some business groups who said they were not sure further rate cuts would work.

The Federation of Small Businesses (FSB) said the cuts would not have the "desired" effect, and improved access to capital would be more beneficial.

It added that a survey found 63% of its members wanted rates to remain at their current level, compared with only 24% who welcomed further cuts.

"These figures suggest that the recent interest rate cuts are not having the desired effect and other means of economic stimulus are required," said FSB National Chairman John Wright.

See: Mortgage Lenders Vow To Pass Further Interest Rate Cuts

(BMcC/JM)

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