Winners and losers

Paul and Amanda Davis have a standard variable rate mortgage (SVR) with Abbey. The Spanish-owned bank passed on the full cut in the base rate to its SVR customers yesterday, reducing rates from 6.94 per cent to 5.44 per cent.

The Davises live in a three bedroom house in Hartlepool and have £78,000 remaining on their mortgage. Their monthly repayments were £760, but have reduced to £698. “I’m really pleased Abbey has reduced its SVR so quickly, as an extra £62 a month will certainly be useful at the moment,” Mr Davis, 39, a construction manager, said.

“I’m surprised most of the other lenders have not followed suit.”

Jess Price, 62, a self-employed human resources consultant, and her retired husband Keith, 64, had a sinking feeling yesterday. With their life savings in cash Isas they can expect to be hard hit by the base-rate cut.

“At the moment we receive an annual income of about £14,000 from our savings, and we hoped to draw on this as we got older.” The couple have more than £60,000 in Isas with Britannia and NatWest, £18,000 in a First Direct account, £50,000 with an Alliance and Leicester eSaver account and another £60,000 with Anglo Irish and Birmingham Midshire.

With banks expected to follow the base-rate cut with interest-rate cuts of their own, the Prices can expect a dramatic fall in income. This is particularly bad timing as Mrs Price is close to retirement. She said: “A large slice of our future income is going to be reduced. We are luckier than many but when you work hard all your life you don’t imagine you might struggle as a pensioner.

Tim Rhodes, managing director of Skypark Haulage, a logistics and haulage firm, hailed the rate cut as “brilliant” but said he was sceptical whether businesses would benefit. “It’s only really good if banks are encouraged or forced to go along with it,” he said.

Mr Rhodes, 55, whose business is based in Liverpool, said that his own bank had recently raised interest rates. While he said that it didn’t affect his business at present, he added that he knew businessess that had been hit.

However, the firm had been hit by higher fees and charges: “My business, as well some clients and suppliers, has found that banks have been sneaking charges in. We are being charged horrendous amounts of money to transfer money abroad. I am seriously thinking about using other bank accounts to transfer my money.”

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