Lenders slash rates to provide relief to homeowners

Posted under General by Michael

Beleaguered homeowners got some relief as two of Britain’s biggest lenders announced cuts in interest rates on some of the most popular mortgage deals.

Abbey, second biggest mortgage lender in the UK slashed interest rates on a 3-year fixed mortgage by 0.15 percent, bringing the rate down to 5.39% for borrowers depositing 30% of mortgage value.

Royal Bank of Scotland also reduced interest rates on fixed-rate home loans up to 0.6 percentage points, amounting to saving up to £75 from monthly payments on a mortgage value of £150,000.

2-year re-mortgage deals worth 90% of the property value will now be attracting 6.14% interest down from 6.74%.

Though cuts in fixed-rate deals were expected by the experts, many lenders have remained cautious towards fresh lending. Abbey has reduced maximum lending amount to 50% with 15% deposit. It also introduced a £250,000 cap on loans worth up to 85% of value. The previous cap was £550,000. According to the Council of Mortgage Lenders, a large percentage of mortgages in the last 2 years were above £250,000.

Abbey claimed the move was aimed at protecting the quality of its loan book. A spokesperson added that high loan-to-value deals had not been Abbey’s core market and the cap on loan provided strong risk profile with minimal effect on customers.