Moneyfacts notes banks starting to compete on mortgage rates

Date:Thursday 8th October 2009
Author: Susanna Kavka

Moneyfacts has commented that a series of reductions in mortgage interest rates suggests that banks are now starting to compete with each other on the basis of price.

Louise Holmes, a spokesperson for the organisation, made her comments following the news that there has been a drop in the interest rates on mortgages offered by Abbey, Cheltenham & Gloucester, Nationwide Building Society, Northern Rock and Woolwich.

Ms Holmes pointed out that previously lenders had been basing their rates on risk, but now there is an element of competition involved.

However, she pointed out that there is still caution being shown by banks and building societies, since not everyone has access to these lower rates.

"Despite lowering rates, the loan-to-values for most of the products mentioned above remain around 70 per cent, meaning borrowers still need to raise a large deposit to secure the top deals," explained Ms Holmes.

This week, Moneyfacts also identified that four financial service providers have launched new cash Isas for the over-50s - Nationwide, SAGA, West Bromwich and Chelsea.