12
Sep
Abbey to cut mortgage rates again
The Abbey bank has become the latest high-street lender to cut some
of its mortgage rates. It is now making fixed-rate deals cheaper
for people who can put down a deposit of just 15%. In the past week
other lenders including the Nationwide, HSBC and the Co-op bank
have also cut their rates. The downward trend in fixed-rate
mortgage costs is due to the falling cost to banks of borrowing
wholesale funds on the financial markets. 'Fixed rate interest
rates have reduced recently and as the market environment changes,
we're able to pass these benefits to our customers,' said Phil
Cliff, director of mortgages at Abbey. The latest move was welcomed
by Aaron Strutt of mortgage brokers Chase De Vere. 'Abbey cut the
majority of their mortgages over 75% loan-to-value in June,' he
said. 'The remaining deals were not a viable option for thousands
of their borrowers with smaller deposits. 'It is good news that
Abbey have started to offer better deals for those with 15%
deposit,' he added. Competing for business. The changes mean that
the interest charged on some of the Abbey's fixed- and
variable-rate mortgages has come down by up to 0.6%. Until now the
lender had only two fixed rate deals on the market, each for five
years, for those who could not put down at least 25% of the value
of the property. From Monday, it is introducing new deals for those
with a 15% deposit and cutting the interest rates on existing
offers. Ray Boulger, of mortgage brokers John Charcol, said the
mortgage market had improved considerably since the 'depths of
despair' in the first six months of the year. 'This week has seen a
continuation of the trend which started about 10 weeks ago for
lenders to be making frequent cuts in rates on their residential
mortgages, especially fixed-rates, and actively competing for
business rather than competing to avoid business.' 'An increasing
number of lenders have started offering cheaper rates for
loans-to-value up to 60%, 65% or 70%, demonstrating that risk-based
pricing is becoming increasingly important,' he added. He also
pointed out that some building societies were now starting to
compete for business again, after seeing their lending slump
earlier in the summer. Even the buy-to-let market was becoming more
active with some lenders now offering cheaper deals to would-be
landlords, according to Mr Boulger. ARTICLE FROM, www.bbc.co.uk,
FRIDAY 12th SEPTEMBER