Press
High street is cutting mortgage rates again: Moneyfacts
by Joy Dunbar
FinancialAdviser 15th October 2009
Some high street lenders have significantly reduced interest rates this month, according to research by Moneyfacts.
Abbey, Cheltenham & Gloucester, Nationwide Building Society, Northern Rock and Woolwich have made large reductions on some of their products, the study found.
Louise Holmes, a spokesman for Moneyfacts.co.uk, said the changes suggests that the banks and building societies may be launching products with a view to competition, after a lengthy period focusing solely on risk.
She said: "These changes are a step in the right direction, with lenders cautiously dipping their toes back into competitive waters.
However Ms Holmes said a full return to a competitive mortgage market was certainly a long way away off.
She said: "Despite lowering rates, the loan-to-values for most products remains about 70 per cent, meaning borrowers still need to raise a large deposit to secure the top deals.
"Lending is essentially based on risk alone at the moment, although it remains to be seen how long it will take for lenders to cut rates, while at the same time being a little more accommodating with their loan-to-values."
James Carter, proprietor of London-based IFA Independent James said: "Hopefully it is a sign of competition re-entering the market. The lack of competition has been a problem for sometime.
"Northern Rock has reduced its two-year fixed rates and so has Abbey which is good. It is better for the client because there is more competition.
"I do not think that the lenders will go too much lower, because they have to rebuild their balance sheets and get the profits while they can."