Big mortgage lenders have recently started engaging in a price war which has seen HSBC, NatWest, Santander, as well as nationwide reduce their mortgage rates significantly. Some of the banks have reduced their rates by up to 3 percent for fixed-rate deals. These deals are extremely favourable and see the lowest rates ever offered to borrowers in the United Kingdom for long-term loans.
This is largely because cheaper funds have recently been made available from the Bank of England through the Funding for Lending scheme which has recently been initiated. These mortgages are not going to be beneficial for everyone and the very favourable rates are only going to be available for people who are able to put 40 percent of the value of the property down as a deposit.
The people who have the sort of money to put that down on a mortgage are probably going to be those who purchased a home several years ago and have found that the value of the property has now largely exceeded the mortgage. It is going to be appealing for them to switch to a more favourable deal where they are paying less interest.
Currently around 70 percent of mortgages in the country are based on a variable rate, which tends to vary between two percent and six percent. Lifetime trackers are on offer and are also good value at the moment with particularly good deals being available from Lloyds TSB, Nationwide and Cheltenham and Gloucester.
The new deals being offered are so good that even some borrowers who are on a fixed-rate deal might find it worthwhile paying the early repayment charge and abandoning the mortgage in order to take advantage of one of these new deals which are just so much cheaper.