Interest rates: Darling tells banks to pass cut on to mortgage customers

Published on Friday 7 November 2008 10:10

CHANCELLOR Alistair Darling today told banking chiefs to pass on the interest rate cut to customers "as quickly as possible.

The heads of all high street lenders were summoned to a breakfast meeting at the Treasury at which they were urged to drop mortgage rates.

Banks just don't get it - read Business Editor Peter MacMahon's reaction to today's events

It follows the shock move by the Bank of England yesterday to slash the bank base rate by 1.5% to 3% – the lowest it has been in more than 50 years.

The meeting comes amid growing calls for banks to pass on the good news to mortgage holders with immediate effect.

The Conservative Party has urged the Government to force nationalised banks – Northern Rock and Bradford & Bingley – to lower their rates.

On GMTV this morning, Tory leader David Cameron said: "The interest rate should be passed on. If they do not, further action may be necessary."

He added: "The Government owns some of these banks now, so they can take steps."

A host of banks and building societies rushed to withdraw their tracker deals from the market following yesterday's .

Lloyds TSB and Abbey are the only lenders to drop their standard variable rates.

Others appear wary of committing themselves to interest rate cuts while the Libor (London Interbank Offered Rate) – the rate at which banks lend to each other – remains high and with a recession just around the corner.

Today Halifax, the UK's largest mortgage lender, said it was still considering its options.

Nationwide, the biggest building society, said it was "monitoring the markets" before making a decision.

Banks were today reluctant to say who attended today's meeting with the Chancellor, but sources close to the talks said the chief executives of all the main lenders were present.

John McFall, chairman of the Treasury Select Committee, said today it was time that banks acknowledged their "social responsibility".

He said: "They are being short-sighted. Given that they have had copious amounts of money from the taxpayer and are fully guaranteed, it must dawn on them that they have a social responsibility as well.

"The pressure on them will be maintained until they acknowledge that responsibility."