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Halifax raises rates for new borrowers

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by Gill Montia

The plight of first-time buyers has become even more difficult, with the news that Halifax, the UK’s largest mortgage lender, will be charging higher interest rates for those unable to provide a 25% deposit.

The lender has lowered its maximum loan-to-value (LTV) ratio from 97% to 95%, although 97% deals will still be available in branches, with interest charged at a +0.35% premium.

The Halifax’s 2.5 million existing customers will not be affected by the changes, but for new borrowers, interest rates on loans with a deposit of less than 25% will rise by an average of 0.14%.

The changes also apply to Bank of Scotland and Intelligent Finance mortgage brands.

According to Halifax, 70% of its new customers put down a deposit of over 25% and for those able to do so, borrowing costs have decreased slightly.

Meanwhile, Skipton has become the first major lender to charge a fee for a standard variable rate (SVR) loan. Its 6.7% SVR deal now comes with an arrangement fee of £799.

Previously, borrowers would expect to pay a fee of this size for a more attractive deal, such as a fixed-rate or tracker mortgage.

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News posted: April 7, 2008

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