Lenders begin to cut cost of mortgages

Following the decision last week from the Bank of England to cut the base rate to 0.5%, lenders have finally begun passing those savings onto customers with improved mortgage deals. The Abbey led the way with the new mortgage offers, with a five-year fixed-rate deal of just 3.95% if you have a 40% deposit, and a £595 fee.

This offer beat the best deal offered by HSBC, which was a 3.99% deal on a five year deal, with a £999 product fee. Both deals from the HSBC and Abbey were only available on loans of £250,000 or under.

For borrowers looking to take advantage of new mortgage offers, experts believe that the base rate won’t be cut further by the BOE, but mortgage deals are expected to get better, with lower interest rates.

An industry insider gave their views on the base rate cut, and Abbey’s latest mortgage offer:

The base rate may have hit the bottom, but mortgage rates have further to come. I doubt Abbey’s 3.95% will be the lowest five-year fix we see.

The mortgage industry in the UK was further boosted when Northern Rock announced it would be offering mortgages again and had £14 billion to offer borrowers over the next two years.

RBS also stated they would offer £9 billion in mortgages to borrowers this year. This news means we could start to see the housing market turn around, which is good news for those taking their CeMAP training to enter the mortgage advice market.



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