Lloyds TSB promises to pass on interest rate cuts in full

Lloyds TSB has promised to pass any cuts in base rates on in full, if they are reduced by the Bank of England (BoE) on Thursday.

In a welcome move for its existing standard variable rate and tracker customers, Lloyds TSB and Cheltenham and Gloucester (C&G) will automatically cut their mortgage rates on 1 April, if base rates are reduced by the BoE.

The BoE is widely expected to reduce base rates by a further 0.5% having cut rates five times since October 2008.

Lloyds TSB currently does not enforce a “collar” on its mortgage tracker rates so these could theoretically fall to 0% if base rates continue their decline.

If base rates are cut by 0.5% on Thursday, Lloyds TSB and C&G customers with a £150,000 repayment tracker or variable rate mortgages will save £38 per month.

Stephen Noakes, C&G commercial director, said: “There are differing views on what action the Bank of England will take tomorrow and a rate cut is not a dead cert.  If the base rate does fall, we will pass it on to tracker and variable customers, who are already hundreds of pounds a month better off.”

Whilst this is good news for borrowers, savers will continue to see a decline in interest earnt on savings accounts.  Figures from the BoE show that earnings from savings accounts are at record lows.