Abbey cuts fixed rate mortgages
Updated on 10 July 2008
Abbey has become the latest bank to announce it is cutting its fixed rate mortgages as the cost of wholesale funding continued to ease.
The group said it was reducing the cost of its two-year and three-year fixed rate deals by up to 0.15% from Monday.
It is the second time in 10 days that the lender has cut its rates, after previously reducing its two and three-year fixed rate deals by up to 0.2%.
Abbey said it had made the reductions following an easing in swap rates, upon which the deals are based.
The news comes the day after Barclays' lending arm The Woolwich said it was reducing the rate of its lifetime trackers by 0.1% and its fixed-rate products by up to 0.3%. A number of other lenders have also made reductions during the past week, including Nationwide and Cheltenham & Gloucester.
The recent downward movement in rates is good news for homeowners, despite the decision by the Bank of England's Monetary Policy Committee to keep the official cost of borrowing on hold at 5%.
Abbey is reducing its two-year fixed rate deal for people who borrow 75% of their home's value and pay a £999 arrangement fee to 6.34%, while a comparable three-year loan is being reduced to 6.29%.
But to qualify for its best rate, homeowners need a 30% deposit, with Abbey introducing a new three-year fixed rate deal of 5.99% with a £1,695 arrangement fee for people borrowing just 70% of their property's value.
Meanwhile, research from Spicerhaart Financial Services showed that homeowners were continuing to opt for longer-term fixed rate deals to have greater security and benefit from lower rates.
Just 18% of a sample of 1,000 mortgages taken out during June were two-year fixed rate loans, down from 60% 12 months ago.
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