Mortgage rates raised by some lenders
Interest rates on some mortgage products have been increased by a number of lenders, including the Internet arm of HSBC, First Direct, the Cooperative Bank, and the Bradford and Bingley. All of these lenders have raised the interest rates on their fixed rate mortgage deals. The Bradford and Bingley has increased the rates on its fixed rate loans by between 0.5% and 0.7%. First Direct has increased rates on a two year fixed rate mortgage by 0.16%. The Cooperative Bank has increased the rate on its three year fixed rate mortgage 0.7% and the rate on its five year fixed rate deal has gone up by 0.9%.
These latest rate rises come despite the fact that the base rate has fallen three times since December, and has stayed on hold since April. This adds further expense and worry for those trying to get mortgage loans, and will make it increasingly difficult for first time buyers to get onto the ladder due to lack of affordability. Banks have blamed the continued difficulty and expense in securing finance for their mortgage lending operations.
In the meantime another lender, the Alliance and Leicester, has introduced a new mortgage product available to those that meet the eligibility requirements and can put down a deposit of at least 25%. The new mortgage is available through branches, Mortgage Direct, or via brokers. It is a two year base rate tracker, and offers an interest rate of 5.98%. There is a £999 arrangement fee, and the maximum borrowing level subject to status is £1 million.
An official from the Alliance and Leicester stated: “The addition of this new product to our mortgage portfolio demonstrates Alliance & Leicester’s commitment to the mortgage market. With both flexible features and a headline rate below six per cent, it represents a great deal for both new and existing customers - particularly as fixed rate pricing continues to rise across the market.”
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