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CHEAPER HOME LOANS ARE HERE

Halifax: Reduction in rates

Saturday July 19,2008

By Louise Barnett

Comment Speech Bubble Have your say(3)

MILLIONS of hard-pressed home owners were given new hope that mortgage rates may have peaked with a fresh wave of cuts today.

Halifax, the UK’s biggest mortgage lender, is cutting interest rates on its two and five-year fixed deals.

It said it was acting to remain competitive with high street rivals – the first sign since the credit crunch began that banks are looking for new business.

The move was welcomed by industry experts as a sign that the worst is over for borrowers. It follows a round of cuts by Abbey, Nationwide and Cheltenham & Gloucester in the past fortnight.

Ray Boulger, senior technical manager at brokers Charcol, said yesterday: “I think we will look back on June and July this year and be able to say that was the time when mortgage rates peaked.”

The Halifax yesterday announced its second round of reductions within a week to keep its prices in line with the market.

Its five-year fixed rate deal for buyers with at least a 25 per cent deposit is falling from 6.49 to 6.34 per cent, still with a £999 fee.

Halifax two-year fixed deals are coming down by 0.1 per cent with fees unchanged at £1,330.

The wave of rate reductions follows a fall in the rate at which banks lend money to each other, known as the swap rate.

This is down from mid-June’s 6.52 per cent to around 5.85 per cent.

Mr Boulger said the fall in swap rates was behind the mortgage rate cuts. “I expect fixed rates to come down even further than they have been already. What we have seen certainly is a good start,” he said.

Lower interest rates are good news for both home owners coming off fixed deals and first-time buyers struggling to get on the property ladder.

Cheaper borrowing will help to breathe life into the ailing housing market which last month saw the lowest level of mortgage lending since February 2006.

Banks and building societies advanced a total of just £23.8billion in June – down 32 per cent on the previous year, the Council of Mortgage Lenders said.

Housing market expert John Wriglesworth said the latest rate cuts were a positive sign.

“The fact that now fixed rates are coming down is good news because it means that the expectations of future Bank of England interest rates rising have been stemmed,” he said.

“What this is saying is that the market does not expect interest rates to rise.” Other lenders within Halifax’s parent company the HBOS group are also reducing their rates. Intelligent Finance is cutting 15 of its tracker deals by up to 0.3 per cent.

And Bank of Scotland is cutting three of its self-certification trackers by 0.1 per cent.

Michelle Slade, analyst at comparison site Moneyfacts.co.uk, yesterday said the average rate for a two-year fixed deal had fallen to 6.96 per cent from a recent peak of 7.08 per cent.

“We need to see a more prolonged period of mortgage rates coming down but hopefully it is good news at last,” she said.

The Halifax reductions came after rival lender Nationwide cut some of its fixed rate and tracker mortgage deals by up to 0.46 per cent with effect from yesterday.

Cheltenham & Gloucester had also reduced some of its mortgages for the second time in a month.

The group, which is part of Lloyds TSB, cut its 18-month, two-year and three-year fixed rate deals by between 0.1 per cent and 0.19 per cent with effect from yesterday.

It is saying that the market does not expect interest rates to rise

Housing market expert John Wriglesworth

DONT GET FOOLED AGAIN

19.07.08, 11:04pm

This is peanuts. Anybody that buys into a fast descending market must be mad. Leave it a few months and the prices will approach reality once the forclosures start to kick in. Steer clear of estate agents they went to the same honesty school as the government.

• Posted by: LafyorSocksoff1 • Report Comment

SUCK 'EM IN AND THEN RATCHET UP THE RATES

19.07.08, 6:51am

Anybody who falls for this one should be declared crimimally insane.

All these banks and building societies are doing is dangling the carrot (as in a well know Building Society Advert) sucking the unwary in at an attractive rate, then ratching up the rate, within months of the new contract.

A con and scam

• Posted by: Judgemental • Report Comment

CHEAPER HOME LOANS

19.07.08, 4:05am

The language of business 'Cheaper home loans'. What it really is, is: 'Slightly less extortionate and utterly crippleing rates available' - 'cos we've filled our guts with your money for the time being. But we'll be back!

• Posted by: Plutoblooper • Report Comment