Three big lenders ? the Nationwide Building Society, the Post Office, and Barclays mortgage business Woolwich ? have decided to try and gain the advantage in the mortgage market by cutting the cost of borrowing, thus reducing the rates.
Woolwich has knocked 0.6 per cent off the cost of a two-year fixed rate loan for someone with a 25 per cent deposit. According to the Daily Record, buyers who are on a typical ?150,000 mortgage will save around ?50 a month.
Andy Gray, head of mortgages at Barclays, told the Daily Record: ?We think rates will remain lower for longer than we did before. At the start of the year, we were betting on three or four quarter-point rises in 2010. Now, we think there might be just one. Easter is one of the busiest times of the year for the housing market, so we?re aiming to give people the right deal at the right time.?
Despite cutting down the rate to 3.69 per cent, it?s still 0.5 per cent more than a two-year fixed rate from the merged Co-op and Britannia Building Society at 3.19 per cent and the Post Office at 3.15 per cent.
David Hollingworth, of mortgage brokers London & Country, said: ?Not so long ago, lenders were raising rates. The fact that lenders are now jockeying for position shows there?s clearly been an about-turn. Banks are definitely more willing to lend. But the best deals are still being reserved for those with the biggest deposits of 25 to 30 per cent.?
Recent figures have shown a ?4 billion reduction in outstanding mortgage debt in the final quarter of 2009 while the amount of money people unlocked from their homes was negative for the seventh quarter consecutively.
