Yesterday, there was some rare good news, both for those looking to buy their first property and for those homeowners who may perhaps be searching for a new mortgage deal for a remortgage, as another three mortgage lenders announced that they are cutting their mortgage interest rates again.
This last week or two has shown the beginning of a new trend amongst mortgage lenders as they reduce the cost of borrowing and this move is helping to push mortgage interest rates, particularly on fixed rate deals back to the level they were prior to the credit crunch.
This move does not indicate, nor should it be confused with, a return to increasing property prices, however, it is the cost of borrowing that everybody needs to return to its previous levels.
The Abbey has announced its plans to reduce their mortgage interest rates on both fixed and variable mortgage deals starting from Monday. This amount of discount depends upon the level of deposit that people are able or prepared to put down on the property, which is standard practice, so those with a deposit of 15 per cent would see their interest rate fall by approximately 0.6 per cent, and for those able to put up to a 25 per cent deposit of their property’s value will save 0.1 per cent.
The Abbey said that this move, which as with most mortgage lenders is predominantly due to the recent decrease in the costs of wholesale funding, is aimed to keep its range of home mortgages for those with a smaller deposit competitive.
The mortgage lender is also introducing five additional products to their mortgage range for those who wish to borrow up to 85 per cent of their property’s value and is also cutting its arrangement fees on those mortgages by up to £1,000 in certain circumstances.
Although a 15 per cent deposit is still quite a large figure for first time buyers, this move is good news as it demonstrates how mortgage lenders are returning to a more reasonable level of willingness to advance money to those with smaller deposits and competition is returning to the mortgage market.
First Direct will also be cutting its mortgage interest rates on three mortgages from its offset mortgage deals, which will see the interest rates reduce anything from 0.99 per cent to 0.2 per cent. The mortgage lender has also launched a new offset base rate tracker mortgage at just 0.49 per cent above the Bank of England’s base rate, which means a current interest rate of 5.49 per cent, even though this deal is currently only available to those who are looking for a remortgage, have a minimum of a 20 per cent deposit and must pay an arrangement fee of £999.
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