BSA: Rate cuts may not be passed on

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BSA: Rate cuts may not be passed on

The Building Societies Association (BSA) has said that the Bank of England's cut in the base rate of interest last week was just one of a number of factors that had to be considered when building societies set interest rates for their borrowers.

Speaking at the organisation's annual lunch, John Goodfellow, chairman of the BSA, indicated that although Nationwide had passed on the interest rate cuts, other building societies, having not been bailed out by the government, may decide not to - a move that could be bad news for borrowers seeking personal loans.

The BSA said bailing out banks was "unfair" on building societies and Mr Goodfellow said he thought the government should practice what it preached by passing on the lower interest rates to building societies.

He added: "I wonder if the government would like to look into this? They seem keen on the passing on idea in other respects! This type of 'taxation' started the American War of Independence."

The BSA claimed that by not passing on interest rates it would be protecting its members who save, who outnumber borrowing members by eight to one.

But the move could be bad news for cash strapped consumers seeking lower interest rates on their loans.

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