Abbey mortgage rate cut gives glimmer of hope to first time buyers

12 September 2008 / by Rachel Mason
Abbey has announced that it will reduce rates on mortgage deals for customers with smaller deposits, offering a glimmer of hope to struggling first time buyers.

On Monday, Abbey will cut rates by 0.6 per cent on mortgages for customers with a 15 per cent deposits as well as introducing five new deals.

The UK’s second biggest mortgage lender will also reduce fees on the range, which means a two or three year fixed rate mortgage deal will be available at 85 LTV at a rate of 6.34 per cent while a two or three year variable deal is now 6.44 per cent. Both deals carry a fee of £995.

Abbey mortgage rates will also be cut on some of its 70 and 75 per cent LTV deals by up to 0.1 per cent so that they start at 5.54 per cent.

The move is a significant one from Abbey, who, since the beginning of the credit crunch, had effectively closed its doors to any borrowers with deposits of less than 25 per cent, which is the vast majority of first time buyers.

On the whole, brokers have welcomed the move, but many have pointed about that despite the cuts, Abbey is still not offering the best mortgage deals on the market.

According to moneyfacts.co.uk, Newcastle is offering the most competitive deal at 5.95 per cent b for an 85 LTV with a fee of £1,098, followed by Nationwide’s 90 per cent LTV deal at 6.33 per cent, which has a fee of just £599.

Aaron Stutt if Chase de Vere Mortgage Management told The Times that the cut is “nothing more than a gesture from Abbey”. He said that the lender is still not competing well enough ion best buy tables and “hasn’t offered anything competitive above a loan-to-value of 75 per cent for months,”

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