Press
Abbey offers hope to homeowners by relaxing criteria
The Times 13th May 2009
Brokers are increasingly threatened by the impact of estate agents on the mortgage market, it has been revealed.
Britain's second biggest lender raises the minimum loan-to-value ratio on its best-buy mortgages from 60 to 70 per cent. James Charles Abbey has announced a boost to the mortgage market with major plans to relax its lending criteria for the first time since the start of the credit crunch.
From Friday, Britain's second biggest mortgage lender is lowering the minimum deposit required for its best fixed-rate deals from 40 per cent to 30 per cent, making its most competitive deals available to tens of thousands more homeowners.
It follows a similar move from Woolwich, the mortgage brand owned by Barclays. However, HSBC, Nationwide, Halifax and Lloyds TSB will continue to reserve their best deals for cash-rich borrowers with a 40 per cent deposit.
Abbey, which is owned by Santander, the Spanish banking giant, will offer homeowners with a 30 per cent deposit a two-year fix at 3.65 per cent, with a fee of £995, or a five-year fix at 4.69 per cent.
In recent years, banks and building societies have insisted on charging with borrowers with smaller deposits higher rates to protect against the risk of further falls in house prices and the effects of the worsening economy.
James Carter, of Independent James, a broker, said: "In a market where we have had nothing but a tightening of criteria. It is sign that Abbey has faith that monthly house prices falls are easing. It is excellent news for the market and other lenders will have to follow suit."
There was further good news for homeowners from HSBC, which announced that it is launching a new five-year fix at 4.39 per cent for borrowers with a 25 per cent deposit. The deal will have a fee of £999.
Ray Boulger, senior technical manager at John Charcol, the broker, said: "Lenders are finding that the pool of borrowers who only need to borrow 60 per cent LTV or less is shrinking rapidly. However, the risk of doing 70 per cent LTV deals is certainly fallen compared to a year ago."