Halifax ignores government calls for cut

by Richard Kilner

Story link: Halifax ignores government calls for cut

The largest mortgage lender in the UK, the Halifax, has ignored calls by the government to pass on a recent cut in interest rates to customers.

The Halifax has increased its two year fixed rate and tracker mortgages by 0.5%, citing rising funding costs as the reason.

However, the bank did retain its present rates for its three and five year fixed mortgages.

The Halifax is not alone in not passing along the central bank’s rate cut, with the Alliance & Leicester also raising fixed mortgage rates.

More embarrassingly for the government, nationalised bank Northern Rock has not reduced its rates in line with the Bank of England’s cut.

Although the Bank of England has been regularly auctioning billions of pounds to the banks, the money does not seem to be enough to loosen the lending situation enough to ease the credit markets.