First-time buyers missing out on mortgage cuts

| July 30, 2012
First-time buyers missing out on mortgage cuts

There is concern that recent cuts in mortgage rates are focused on borrowers with large deposits rather than first time buyers.

The government is launching its Funding for Lending scheme to help reduce the cost of mortgages, but although rates were cut on 200 mortgage products in July, the cuts favoured those with deposits of 10 per cent or more.

The new funding for lending scheme will be launched by the Bank of England on 1 August.

UK banks and banks and building societies will be able to borrow funds at a lower cost than on wholesale financial markets.

They will initially be able to borrow the equivalent of 5% of the amount they currently lend, but they will be able to borrow more if they increase their lending.

The first allocation of the scheme is expected to boost lending by around £80 billion.

Nat West today became the latest lender to lower it mortgage rates with a new five-year fixed rate mortgage at the lowest ever rate of 2.95 per cent.

HSBC previously held the record with a 2.99 per cent rate.

However the Nat West product is only available to borrowers with 40 per cent equity and they will have to pay a hefty fee of £2,495.

First Direct also recently reduced its mortgage rates, with all of its fee-free and standard range benefiting from the cuts.

Following the changes, a two-year fixed rate mortgage with HSBC has a rate of 4.29 per cent and a loan to value of 90 per cent.

first direct’s Ian Bartholomew said: “first direct is renowned for providing market-leading customer service and we’re happy to help borrowers looking for a better deal by cutting our mortgage rates at a time when other household bills are rising.”

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