Barclays and Nationwide launch new mortgage deals
Following the announcement of the government’s £80 billion Funding for Lending scheme, Barclays and Nationwide have cut their mortgage rates.
The mortgage market has been shrinking for some time, with lenders tightening their lending criteria and demanding high deposits on home loans.
Last month the number of mortgages approved for house purchases fell by 11 per cent according to figures from the British Bankers’ Association.
The latest move by Barclays and Nationwide suggests that the promise of cheaper borrowing through Funding for Lending could already be encouraging lenders to offer better mortgage deals, even though the scheme doesn’t start until August.
Banks and building societies will be able to borrow money, over four years, for an interest fee of just 0.25 per cent – significantly less than the current cost of borrowing on wholesale financial markets.
Nationwide Building Society and Barclays have announced cuts to the cost of both fixed and tracker mortgage deals.
Barclays, through its mortgage arm Woolwich, is lowering six deals by up to 0.3 per cent, while Nationwide building society is reducing rates by up to 0.4 per cent across a range of mortgage deals.
Barclays is offering a two-year, fixed-rate deal at 3.29 per cent with no fees attached, and with a 30 per cent deposit required.
Rachel Springall, from comparison website Moneyfacts, said: ‘The new two-year fixed deal from Barclays is the lowest on the market at 70 per cent loan-to-value.
‘There is no fee to pay which will be good news to borrowers looking to keep down up-front costs.’
The cheapest mortgage now available from Nationwide is a two-year fixed rate deal at 2.99 per cent.
According to the Council of Mortgage Lenders, Nationwide became the third largest mortgage lender in 2011.
It was in fifth place in 2010 and overtook RBS to move into joint third position with Barclays in 2011, with 12.1 per cent market share each.
RBS had a market share of 10.4 per cent.
Lloyds Banking Group retained first place, with a market share of 19.9 per cent, a fall from 22.2 per cent in 2010, and Santander came in second, with a 16.8 per cent market share, compared with 17.9 per cent in 2010.