Nationwide Building Society fails to pass on rate cut

Nationwide Building Society will follow the trend set by State-owned mortgage bank Northern Rock, which reduced its standard variable mortgage rate by just 0.15%, and HSBC which failed to pass on any cut at all.

The news comes as research by banking analysts Defaqto shows borrowers with less than a 20% deposit have seen their mortgage costs rise by more than twice the amount of those who can afford to put down a larger upfront deposit.

Many experts believe the Bank of England will continue to slash interest rates, with some predicting a fall from the current level of 4.5% to just 2.5% within 12 months.

But the fear is that homeowners will not feel the benefit if mortgage lenders refuse to pass on these reductions in the mortgage rates they charge.