A&L relaunches tracker mortgages
Updated on 12 November 2008
Alliance & Leicester relaunched its tracker mortgages but at double the margin it previously charged.
The group is also only offering the product to people with at least a 40% deposit, and currently has no plans to reintroduce the deals for people borrowing 75% or 85% of their home's value.
Its two-year tracker product, which comes with a 1% arrangement fee, has a starting rate of 4.89%, or 1.89% above the Bank of England base rate, compared with a margin of 0.89% above base rate previously.
A&L is only the third lender to relaunch tracker mortgages, after groups scrambled to withdraw them following last week's surprise 1.5% interest rate cut.
Abbey and Lloyds TSB have also since re-entered the market, both offering two-year deals for people with a 60% deposit of 1.89% above base rate.
Both groups are also limiting the loans to people who have at least a 25% deposit.
The problem for lenders is that the key inter-bank lending rate three month Libor, upon which many variable rate mortgages are based, remains stubbornly high.
The rate eased by 0.04% to 4.38%, but it remains well above the Bank of England base rate of 3%, and its pre-credit crunch range of between 0.15% and 0.2% above base rate.
These higher borrowing costs, combined with the shortage of funds to lend, are limiting the scope for mortgage groups to reduce their rates.
A&L also announced that it was offering a new two-year fixed rate deal of 4.49% for people with a 40% deposit who pay a 1% arrangement fee.
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