Cuts! Glorious cuts. And that's despite no change in the base rate.
Woolwich was the first lender to announce it is dropping certain key rates, and Northern Rock and Abbey followed close behind.
They're not stingy cuts, either. Interest on the Woolwich Lifetime Tracker mortgage for borrowers with up to 70 per cent loan to value (LTV) will drop nearly half a percentage point to 2.79%. That's still 2.29 per cent above base rate (see our previous notes of caution about trackers), but even so, for now that's a best-buy tracker for many. Alternatively, if the £995 fee puts you off and you're borrowing under 75 per cent LTV, there's a no-fee lifetime tracker available at 3.19%.
Northern Rock's cuts are less steep but it has managed to match Woolwich's 2.79% tracker mortgage rate. This, however, is on a two-year deal not a lifetime deal. It asks for a smaller fee of £595.
Abbey, not quite matching the others' leading rates, launched a two-year tracker mortgage at 2.94% for borrowers with a 30 per cent deposit and a £995 fee. At the same fee level and LTV limit, Abbey also cut the rate to 3.88% on its 2-year fixed rate mortgage. All Abbey's deals are available through Alliance & Leicester branches as well as its own (and, of course, through mortgage advisers).
HSBC hasn't reduced any mortgage rates (yet) but it did slightly pre-empt this flurry of cuts with its recently-extended 1.99% deal.
Biggest cut of the day is the 0.6 per cent sliced off certain deals in Northern Rock's buy-to-let mortgage range. With fees of up to 2.5 per cent of advance, its lowest rates aren't ideal for everyone, but it does provide a no-fee buy to let mortgage at 7.39% fixed for two years (up to 70 per cent LTV). Serial investors also appreciate its £3 million, 10-property portfolio limit.
So, competition heats up among the big (non-bailout) boys – Santander, Barclays and HSBC – and Northern Rock is making aggressive moves again, notably on fees (an overlooked area of mortgage affordability). Will smaller lenders be prompted to trim their lending rates too? Or will they compete on other factors, such as loan to value? Watch this space.
Subscribe