Abbey reduces mortgage rates and launches £5m loans

01 August 2008 / by Rachael Stiles
Spanish-owned bank Abbey is reportedly lowering the interest rates on some of its mortgage deals, and launching a large home loans service.

From today, Abbey is lowering the rates on its two and three year fixed rate mortgage deals, and its tracker product range by up to 0.15 per cent.

Its two year fixed rate mortgage will now start from 6.19 per cent and its three year fixed rate deals from 6.29 per cent, on its 75 per cent LTV range of mortgages that require a deposit of at least 25 per cent.

The bank is also launching a new large home loans service, whereby homeowners can borrow a mortgage of between £550,000 and £5million. These loans are only available in the form of a three-year tracker mortgage at 6.34 per cent, or a three year fixed rate of 6.79 per cent and only customers who have at least a 30 per cent deposit will be eligible.

Abbey joins several other lenders which have cut their rates in the last few weeks. Britannia has also cut the cost of its two, three and five year fixed-rate mortgages by up to 0.35 per cent, effective from today.

HSBC lowered its rates and fees on mortgages this week by up to 0.31 per cent, with its tracker and discount mortgages now starting from 4.99 per cent, and its booking fee dropping from £799 to £599.

"With an estimated 750,000 people looking to remortgage in the second half of 2008, we are doing all we can to keep the cost of borrowing down." said Andy Mielczarek, head of lending at HSBC. "Lowering our rates by 0.31 per cent means a saving of almost £500 a year for a homeowner with a £160,000 loan."

Meanwhile, mortgage intermediaries predict that mortgage volumes will fall by approximately six per cent over the next 12 months as house prices fall and people struggle to secure a loan, according to research from the Intermediary Mortgage Lenders Association IMLA.

"The findings of the survey show intermediaries as realistic but not unduly disheartened." said Peter Williams, executive director of IMLA. "They recognise that mortgage volumes will be lower in the year ahead than they have been in the past and that they need to adjust their business models accordingly."

"House prices are expected to see a modest correction," he said, "but in the absence of forced sellers in the market place, they do not anticipate a major collapse in property values. These more positive perceptions contrast with the more negative commentary that currently dominates the market and reflects the fact these are locality based views."

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