Banks feel heat on rates.

Byline: By Robert Dex 

BANKS were under growing pressure today to reduce their interest rates in line with the Bank of England's massive 1.5 per cent cut.

Yesterday the Bank stunned the City by opting for the biggest rate cut since 1981.

Lloyds TSB immediately announced it was following suit, though it is constrained by a pledge to keep its rates within two per cent of the Bank of England's base rate.

And by the end of the day Abbey had done likewise.

Halifax, the UK's biggest lender, said yesterday it was considering whether to pass on the cut as politicians including Chancellor Alistair Darling clamoured for banks to toe the line in return for the billions of pounds the Government pumped into propping them up in the aftermath of the credit crunch.

Following yesterday's announcement, around 30 lenders pulled their range of tracker loans.

And experts fear banks will not pass on all of the interest rate cut to customers.

A spokeswoman for Halifax said: "We have not made a decision yet. It is still under consideration."

Jonathan Davis, director of financial advisors Armstrong Davis, said: "The banks nationally and globally have lost hundreds of billions, if not trillions, of pounds.

"Most banks will cut their variable rates but I'm not sure they are going to cut them the whole 1.5 per cent."

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CAPTION(S):

Chancellor Alistair Darling