Mortgage providers uninspired by £500bn rescue plan

| October 10, 2008 | 0 Comments
Mortgage providers uninspired by £500bn rescue plan

The announcement earlier this week of the £500 billion Government package of support for UK banks, plus a 0.5% cut in the Bank of England’s base rate, has met with disappointing results in the mortgage market.

According to financial website, Moneyfacts.co.uk, home loan providers have continued to withdraw products with high loan-to-value (LTV) ratios, leaving the number of deals that do not require substantial deposits at 3,281, compared with 10,726 a year ago.

At the same time, Moneyfacts has found that the number of deals offering 60% of a property’s value have risen by 84% since the onset of the credit crisis.

These loans also have the most attractive interest rates, as if to thwart the first-time buyers needed to kick-start the UK’s housing market.

Those attempting to get a foot on the property ladder now need a large amount of capital before they can secure a mortgage at affordable rates.

According to the website, ten lenders including Halifax, Woolwich, Cheltenham & Gloucester and Royal Bank of Scotland have reduced their standard variable rates in line with this week’s cut in the base rate.

However, Abbey will not be passing on the 0.5% decrease for new customers opting for one of its tracker loans.

The lender has also so far left its SVR unchanged, in company with Northern Rock and Bradford & Bingley.

Also this week Lloyds TSB and its mortgage arm, Cheltenham and Gloucester, withdrew new tracker loans to customers with less than a 25% deposit.

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