Mortgages ''do not reflect'' rate cuts

Lenders are in "no hurry" to pass the recent cuts in interest rates on to consumers, according to Moneyfacts.

The Bank of England cut the base rate to three per cent earlier this month, down from five per cent in October.

However, while the inter-bank lending rate (Libor) has matched this with a cut of more than two per cent, mortgage products have not followed suit.

The average rate on a two-year tracker mortgage has reduced by an average of just over one per cent, while the average fixed-rate mortgage has reduced by only 0.27 per cent since October.

Michelle Slade, analyst at Moneyfacts, said: "The lenders have been blaming the high costs of funds in the money markets for not bringing rates back down, but these rates have now started to fall.

"Mortgage rates are not following suit, even though the margin between bank base rate and LIBOR is less than it was before the October cut."

Moneyfacts also reveals that there are only 30 two-year trackers available to borrowers on the market, compared to 106 in October.

Meanwhile, figures from Liverpool Victoria suggest that many borrowers with interest-only mortgages have not yet specified capital repayment plans.