Fixed rates fall again

Posted on 11 January 2010 by Drew

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With Yorkshire Building Society announcing cuts from today across the board in its fixed rates, they become the latest lender to cut rates despite a static bank rate and swap rates at the top end of their recent trading range.

Last week Chelsea, Coventry, Halifax, HSBC and Nationwide all cut some fixed rates and ITL mortgages expanded its range to include competitive 95& LTV fixed and tracker rates.  With its new rates Coventry has adopted a different stance to most lenders by primarily targeting the low LTV remortgage market, with very competitive fixed rates for 3 and 5 years for LTVs up to 50% LTV at 4.25% and 4.99% respectively, both with a £999 fee and a free valuation and free legal fees.

There are a number of reasons that account for why we are seeing these cuts.  There is undoubtedly an increase in competition with a number of new lenders currently in the starting blocks waiting for the gun.  Additionally, lenders are far less dependent on swap rates for their new funding, rather looking toward their savers to balance the books.  It is also John Charcol’s belief that lenders are becoming more comfortable with the wider economy, most notably the bounce in house prices and the expectation that interest rates will remain low for some time – resulting in far less repossessions than initially expected.  And, underlying all this, is a modest improvement in wholesale funding.

The buy to let market is now also benefitting from an increase in competition, with an increased range of products and/or lower rates announced over the last week from BM Solutions, Godiva, Whiteaway Laidlaw and Aldermore and, from tomorrow, The Mortgage Works.  With the buy to let market suffering badly over the last 2 years, this is welcome news for many of the UK’s landlords.

Categories: Fixed rate mortgages, Mortgages, Interest rates


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