Abbey cuts rates for 15% deposit holders

Abbey’s latest cut in mortgage rates offers a glimmer of hope to potential first-time buyers because the lender is reducing interest on some deals that require only a 15% deposit.

In recent weeks leading lenders have been trimming rates regularly, with Co-operative Bank, HSBC and Nationwide all taking action this week.

However, the best rates have been reserved for those with plenty of equity in their homes.

Last week Abbey cut rates on its two and three-year fixes to 5.79%, but only for those with a 25% deposit.

However, from Monday rates on its fixed and variable loans will decreased by up to 0.6%, including those with a loan-to-value (LTV) ratio of 85%.

Interest on two or three-year variable deals for borrowers holding 15% of equity in their properties will fall from 7.04% to 6.44%, while the fee will come down from £1,499 to £995.

For months Abbey and many of its High Street competitors have been evading business from first-time buyers and others by charging high rates and fees for those with small deposits.

Earlier this week, financial website, Fool.co.uk, revealed that home buyers looking for an LTV of 60% can access around 4,588 mortgage products.

By comparison, home buyers with a 5% deposit, seeking an LTV of 95%, have only 70 mortgage products to choose from.

While Abbey’s latest offering to 15% equity holders will not head the best-buy tables but it is at least a sign that change is on its way.

Discuss this in the Finance Markets forums

Story link: Abbey cuts rates for 15% deposit holders