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Mortgage lenders cut rates

Borrowers with big deposits will benefit

There are now fewer mortgages available

Several of Britain’s biggest mortgage lenders have cut their rates since the start of October, with some deals going down in price by as much as 0.7%.

However, not all borrowers will benefit from the changes. Although lenders seem to have stepped up their competition for customers in possession of large deposits or equity stakes, those unable to put down a significant proportion of their property’s value up front are still likely to struggle when searching for a home loan.

Lower rates from lenders

According to Moneyfacts, the financial data website, five major mortgage lenders have reduced the rates charged on selected products during the first week of October.

  • Abbey has reduced some of its fixed rate deals by up to 0.11%. The bank has also launched a new range of Homebuyer Plus mortgages aimed especially at first time buyers.
  • Cheltenham & Gloucester has reduced its five year fixed rate mortgage (only available through brokers) by 0.20% to 5.99%.
  • Nationwide Building Society has cut selected tracker mortgage rates by up to 0.36%, and has trimmed the cost of some one and two year fixed rate deals by up to 0.70%.
  • Northern Rock has reduced selected mortgage rates by up to 0.30%.
  • Woolwich has cut its lifetime tracker rate by 0.45% to 2.79%.

In addition, HSBC has announced that it will extend its 1.99% two-year discount mortgage offer until the end of October.

Top deals need large deposits

Moneyfacts spokesperson Louise Holmes said: ‘These changes are a step in the right direction, with lenders cautiously dipping their toes back into competitive waters. However, a full return to a competitive mortgage market is certainly a long way off.’

Which? property and mortgages expert Cathy Neal commented: ‘Although it seems lenders are keen to cut their rates, the majority are still cautious when it comes to the size of the deposits they demand. Most of the market’s cheapest mortgages still come with maximum loan-to-value ratios of around 70%, meaning consumers must put down 30% of their property’s value up front.

‘What’s more, it’s important not to rush out and select a mortgage deal too quickly when rate cuts like these are announced. Before committing to any mortgage deal it is crucial to compare home loans from a variety of providers and take into account their fees and charges.’

Finding the right mortgage

The Which? mortgage finder is a free interactive tool that allows you to look at a range of mortgages, comparing their features to find the best deal for you. You can also tailor your search to look for particular types of home loan in line with your individual needs.

Meanwhile, if you’re confused about the different types of mortgage deals available, or unsure of which would be best for you, check out the .

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