Lenders cut interest on fixed-rate deals

Sunday 13 December 2009 01:00 GMT
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Mortgage lenders are busy slashing their rates as competition hots up for borrowers, according to financial information firm Moneyfacts.

Last week, a host of big-name providers including First Direct, Alliance & Leicester, Abbey and Cheltenham & Gloucester all cut their rates on their fixed mortgage deals. The average rate on a two-year fixed mortgage fell to 4.86 per cent last week from 5 per cent a week earlier, such was the scale of the cuts.

"Lenders appear to be putting the 'open for business' sign back in the window and bringing competition back to the market," said Michelle Slade, a mortgage expert at Moneyfacts. "The number of two-year fixed deals paying below 4 per cent has increased by from 53 to 94 in the past two months."

The news that lenders are lowering rates came as further signs of confidence returning to the UK property emerged. Last week, Halifax said that house prices rose by 1.4 per cent in November, the fifth month of rises. Meanwhile, Nationwide estimates that if prices remain unchanged through December, they will end the year nearly 6 per cent higher than they started it, against the building societies' and nearly all analysts' forecasts.

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