Banks Cut UK Mortgage Interest Rates

By: MoneyFacts

Mortgage lenders have continued to cut fixed rates, causing the average two year fixed mortgage rate to continue to tumble.

Last week Moneyfacts.co.uk reported that the average two year fixed had fallen below 5.00% for the first time since June 2009, but since then rates have fallen further, standing at 4.86% today.

This is the biggest weekly fall since the beginning of the year, when the Bank of England cut bank rate by 0.50% to 1.50%.

Lenders who have cut fixed rates in the last week include:

• Abbey – selected rates cut by 0.20%
• Accord Mortgages – rates cut by 0.40%
• Alliance & Leicester – selected rates reduced by up to 0.25%
• Cheltenham & Gloucester – selected rates cut by 0.10%
• first direct – selected rates reduced by 0.05%
• Leeds BS – selected rate reduced by 0.26%
• Post Office – rates reduced by up to 1.30%
• Scottish Widows Bank – rates reduced by up to 0.40%
• Yorkshire BS – rates reduced by up to 0.30%.

Michelle Slade, spokesperson for Moneyfacts.co.uk commented:

“Lenders finally appear to be putting the ‘open for business’ sign back in the window and bringing competition back to the mortgage market.

“Margins on fixed rate mortgage deals have steadily increased in the last year as lenders looked to repair damaged balance sheets.

“Following their peak in October 2009, mortgage margins on the popular two year fixed deals have fallen steadily, now standing at the lowest level since August 2009.

“The number of two year fixed deals paying below 4.00% has increased by from 53 to 94 in last two months and now accounts for a quarter of all two year fixed deals on the market.

“Borrowers will be hoping that the early Christmas present they have received from lenders will continue into 2010.”

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