Funding for Lending scheme prompts mortgage cuts

| October 12, 2012 | 0 Comments
Funding for Lending scheme prompts mortgage cuts

Mortgage brokers have attributed moves by several lenders to cut their mortgage rates to the Bank of England’s recently launched Funding for Lending scheme.

Ray Boulger of mortgage brokers John Charcol said that the Funding for Lending scheme was the key to the cuts.

“Wholesale borrowing rates have fallen quite quickly since the scheme was announced,” he said.

The scheme incentivises banks and building societies to increase their lending to individuals and non-financial companies by providing funding at below the current elevated market rates.

Several lenders have announced rate cuts this week, including HSBC which has reduced the rate on its two-year fixed-term mortgage for those with a 60 per cent LTV to 2.44 per cent, for a fee of £1,499.

The product is also available for a fee of £599 at a higher rate of 2.89 per cent.

For borrowers with less equity, the two-year fixed term mortgage is available at 3.09 per cent for 70 per cent LTV borrowers and at 3.49 per cent for 80 per cent LTV borrowers, both with a £599 fee.

Nationwide has reduced most of its fixed rate mortgages by up to 0.40 per cent and its tracker mortgages by up to 0.20 per cent.

It is reducing its two-year fixed rate from 4.69 per cent to 4.29 per cent for new customers, at up to 85 per cent LTV.

The product will be available at 4.19 per cent for existing borrowers.

Its five-year fixed rate mortgage is being cut from 3.69 per cent to 3.49 per cent up to 70 per cent LTV for new customers and 3.39 per cent for existing customers.

A £900 product fee and a £99 booking fee apply on both rates, but this is reduced to £400 for first time buyers.

In a move that will help first-time-buyers the Yorkshire Building Society is reducing its rates for borrowers with small deposits.

It offering a two-year fixed rate mortgage for 90 per cent LTV borrowers at 4.24 per cent, and at just 2.64 per cent for 75 per cent LTV borrowers, both with a £995 fee.

Tesco Bank has cut its mortgage rates by up to 0.4 per cent.

Its two-year fixed rate at 70 per cent LTV has fallen from 2.99 per cent to 2.79 per cent, a two-year fixed rate at 75 per cent LTV has been cut from 3.39 per cent to 2.99 per cent and a two-year fixed rate at 80 per cent LTV has been cut from 3.89 per cent to 3.79 per cent.

An £800 product fee and £195 booking fee apply to all three deals.

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