More mortgage lenders cut rates
Updated on 12 September 2008
Homeowners received some rare good news on Friday with three more mortgage lenders announcing they were cutting their rates.
Lloyds TSB's lending arm Cheltenham & Gloucester, Abbey and first direct all announced reductions, with 0.99% shaved off rates in one case.
The move continues the current trend among lenders to reduce the cost of borrowing, helping to push fixed rate deals back down to their pre-credit crunch levels.
Cheltenham & Gloucester said it was knocking up to 0.12% off its two-year fixed rate products from Monday September 15, to give a new rate of 5.48% for people with a 40% deposit who pay a £1,995 arrangement fee.
Stephen Noakes, director of marketing at Cheltenham & Gloucester, said: "Over the last month there have been consistent improvements in funding costs, which we have been able to pass on to customers. Hopefully today's announcement should help bring back some much needed confidence to consumers looking for a mortgage."
Earlier Abbey announced plans to reduce its fixed and variable mortgage rates from Monday. People with a 15% deposit will see rates fall by up to 0.6%, while deals for those borrowing up to 75% of their home's value are being shaved by 0.1%.
The group said the move, which follows recent falls in wholesale funding costs, aimed to make its range of home loans for people with smaller deposits more competitive and to bring these rates back in line with its other products
It is also introducing five new products to its range for people borrowing up to 85% of their home's value and it is slashing arrangement fees on these mortgages by up to £1,000.
While a 15% deposit still represents a sizeable sum for first-time buyers to find, the move is good news as it indicates lenders are becoming more willing to advance money to people with smaller deposits as competition returns to the mortgage market.
First direct also announced it was cutting rates on three of its offset mortgages, reducing them by between 0.2% and 0.99%. It has also launched a new offset base rate tracker mortgage at 0.49% above the Bank of England base rate, giving a current rate of 5.49%, although the deal is only available to people remortgaging who have at least a 20% deposit and pay a £999 arrangement fee.
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