Yorkshire building society has cut the cost of its two-year fixed-rate mortgage to just 1.99% at 60% loan-to-value (LTV), taking it to the top of the best-buy tables alongside HSBC. The mortgage has a lower fee than HSBC’s – £995 against £1,499 – and is one of the lowest rates ever offered to UK borrowers. The move is part of cuts across the society’s range and has taken place amid a flurry of activity in the mortgage market.
“Lenders have a higher lending target for the year so the competition is hotting up. There are still good margins for the lenders and I see over the coming weeks more announcements from lenders that they are cutting their rates,” said Daniel Bailey, a broker at Middleton Finance.
Barclays has also reduced rates across its range by up to 1 percentage point, and is now offering its cheapest ever deals. Borrowers with a 40% deposit can take a two-year fixed-rate at 2.39% (£999 fee), while at 70% LTV the three-year fixed rate has come down to 2.89% (£499 fee). It has also launched a 95% LTV mortgage at 4.69% designed to allow parents to help their offspring get on the housing ladder by depositing savings with the bank.
Santander and Nationwide have also cut rates on a raft of mortgage deals to as low as 2.69%, with Santander launching three deals at 90% LTV.
The Funding for Lending scheme, launched in August 2012 to offer banks and building societies cheap funds for them to pass on to borrowers, is set to gather pace.
Banks have already indicated they will be lending more and this will drive down the cost of borrowing. Funding costs have been pushed down by Funding for Lending and some easing of tensions in the eurozone, which have made banks more willing to lend money to each other.
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