Its Good News Week

Posted on 25 July 2008 by Ray Boulger

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For the last 3 weeks we have seen a steady stream of lenders cutting rates and there are more today, as detailed below. We are in a very different ball game to the first 6 months of the year, with lenders now actually competing for business, whereas until a month ago they were competing to avoid business! Fixed rates are being cut because of the fall in swap rates, e.g. 0.7% on 2 year swaps, since the middle of last month but it is particularly encouraging to see some lenders reducing tracker rates as well.

RBS Group (RBS, NatWest and First Active), Halifax, Bank of Scotland, Scottish Widows, Stroud & Swindon, Newcastle and even Northern Rock have all announced rate cuts today, with Stroud & Swindon taking the yellow jersey today with a massive 0.95% cut in a Buy to Let rate.

Halifax is cutting 16 of its rates from tomorrow, in what is now becoming a regular Friday HBOS feature (Halifax has cut some rates on each of the last 5 Fridays), with the biggest cut being 0.3%. They are also introducing some new products, including a 3 year tracker @ Bank Rate + 1.39% for LTVs between 75.01% and 90%.

Bank of Scotland is reducing the rates on their mainstream (loans up to £500,000) 2 & 3 Year Trackers by 0.1% but there are bigger reductions in their Large Loan range (loans above £500,000), where they are reducing selected tracker & fixed rates by between 0.1% and 0.45%. Some arrangement fees are also being reduced.

Stroud & Swindon are cutting some rates from today. In particular their 3 year residential fix is down by 0.39% to 6.45% and they have replaced a 2 year Buy to Let fixed rate of 7.75% with a 3 year fixed rate of 6.8%, a huge 0.95% reduction. 

Scottish Widows Bank is reducing its 2, 3 and 5 year fixes on Monday by between 0.3% and 0.5% but it is not changing any of its tracker rates. 

Finally, even Northern Rock is getting in on the act!!

On Monday they are reducing the rate on their cheapest 2 year fixes by 0.15% to 6.24% for purchases and 6.34% for remortgages and in addition these rates will now be available up to 75% LTV compared to 70% with their previous deal. However their 5 year fixes are increasing by between 0.2% and 0.4%, making their cheapest rate 6.59%. The arrangement fee is £995 and on remortgages there is a free valuation and free legals. In addition these rates are available up to £1m, compared to £1/2m maximum for many lenders on their headline rates, and all their deals are fully flexible. This all makes these new 2 year fixes very competitive.

This contrasts sharply with what is happening in the U.S., where mortgage rates are going up, partly reflecting concerns in financial markets about the troubles at Fannie Mae and Freddie Mac and partly on inflation fears. Mortgage rates shot up this week with, for example, 30-year rates climbing to 6.63%, up 0.37% on the week and the highest level since 1 August last year.

Category: Buy to let, Interest rates, Mortgages

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