Mortgage competition rises with Abbey's market share as RBS cuts rates

30 April 2008 / by Joy Tibbs
Competition is hotting up in the mortgage market as Abbey reveals its share has grown significantly in recent months, and Natwest and RBS have both lowered rates on their fixed and tracker mortgages.

RBS has cut mortgage rates by up to 0.3 per cent from today, with all its new fixed and tracker mortgages down at least 0.1 per cent. It has also set up a new First Home Saver Account for those trying to save towards a deposit. The regular savings account offers tax-free cashback of up to £5,000 on completion of a RBS mortgage.

CEO of consumer banking at RBS, Paul Geddes, said: "Whilst 2008 has seen a shrinking mortgage market, we have actually increased the amount we have lent by 18 per cent and plan to continue this trend for the rest of the year. Today we are launching two initiatives to build on this - one to help borrowers looking for a new mortgage and the other for those saving for the deposit on their first home.

"In these uncertain times, we are giving practical support by providing lower rates on all our new fixed and tracker mortgages. At the same time we are offering a savings product that delivers a generous tax-free reward for saving towards a deposit on a first home."

Meanwhile, while many of its rivals have struggled to stay afloat during the credit crisis, Abbey has revealed that its share in the UK mortgage market rose 10 per cent during the first quarter as its competitors. "Our market share is more than 15 percent which is more than our natural share because of the market conditions," explained Alfredo Saenz, CEO at Santander, which owns Abbey.

The provider's net mortgage lending for the quarter totalled £2.9 billion, more than double the £1.3 billion reported in the prior-year quarter. Although there has not been a great deal of new mortgage business at Abbey, many existing customers have chosen a remortgage deal with the bank.

Earlier this month, Abbey decided to axe its buy-to-let mortgage deals available through brokers, so that customers are only able to apply for this type of mortgage directly through the company. It also withdrew its 100 per cent mortgage deals, an action which has also been taken by all other mortgage providers. "We are selecting loans very carefully, altering our spreads and conditions," Mr Saenz said.

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