Abbey drop mortgage rates

Abbey has announced another round of cuts in the mortgage interest rates for new borrowers. They will reduce the cost of two and three year fixed and tracker rates by 0.1%, a similar cut as last Friday.

The month has seen a reduction in rates from both major lenders and smaller ones.

Responding to the latest cuts a spokesman for Halifax said; "It's down to competitor activity, we are aiming for a one-in-five market share,"

The banks are cutting their rates due to the reduction in cost of borrowing wholesale funds on the financial markets. This is good news for borrowers who have had difficulty in the current credit crunch crisis. Competition between the major lenders is fuelling rate cuts.

Ray Boulger of the mortgage brokers John Charcol said; “there are increased signs of competition in the market and the big lenders are starting to slug it out a bit,"

Cautiousness on the part of the banks does mean that the best rates are only available to those borrowers who can raise a 25% deposit or more, so sadly many first time buyers will still struggle.

Darren Cook of the financial information service Moneyfacts said a rising fees means that the rate reduction is not quiet as good as it seems.

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