Mortgage lenders start matching Bank rate cut

LONDON (Reuters) - Three major mortgage lenders said they would cut their standard variable rate by 0.5 percentage points, matching the Bank of England's rate cut Thursday, and leaving others saying they were considering their response.

HSBC, Lloyds TSB and mutually-owned Nationwide all said they would reduce their standard variable rate by 0.5 percentage points.

The move leaves both Lloyds and Nationwide's variable rate at 3.5 percent, and HSBC's at 3.94 percent.

HSBC and Lloyds also said they would pass on the full cut to mortgage customers holding tracker loans, which carry a repayment rate that moves in line with the BoE base rate.

However, Nationwide confirmed that tracker customers whose contracts include a 2.75 percent base rate "floor" will not benefit from the cut or any further cuts.

Nationwide did not enforce the floor when the Bank cut rates to 2 percent from 3 percent last month, but said last week it would not pass on any reductions below 2 percent.

HBOS, Barclays, NatWest owner Royal Bank of Scotland and Santander-owned Abbey all said their tracker customers would benefit from the full 0.5 point cut, but that they were still considering whether to lower their variable rates.

RBS, a major lender to businesses, added that the "vast majority" of its small business customers hold base rate-linked loans, and would therefore benefit from an immediate drop in borrowing costs.

The government has repeatedly urged lenders to help stimulate the economy by passing on in full any central bank rate cuts.