Small deposit borrowers penalised by almost a full 1%
Posted on 1 May 2008 by
Abbey is reducing its 2 year Tracker at 75% and their 2 year fixed rate products at 75% by 0.11%. All other fixed rates are increasing by between 0.02% and 0.21%. This takes the 2 year fixes to 5.88% (less than 75% LTV) versus a 90% loan to value deal between 6.62 % and 6.81%, nearly a whole percent.
Lenders are pricing more and more for risk, rewarding borrowers with high deposits considerably better rates. An new Abbey borrower with less than a 10% deposit would pay around £1,032 a month for a £150,000 mortgage, but with a 25% deposit or more, would pay £955 per month for that same £150,000 loan.
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