High Street bank the Abbey has become the latest mortgage lender to reduce some of the interest rates on its mortgages, bringing a ray of hope to borrowers who were under the impression that borrowing was going to keep on getting more expensive. Whilst the interest rate cuts are only small, particularly given that the Bank of England has cut the base rate three times since December by a total of 0.75%, it is a start in a financial climate where the cost of borrowing has been climbing month after month.
The Abbey is cutting interest rates on all of its flexible and tracker mortgages by 0.05%. It is also cutting its fixed rate deals for new borrowers by 0.17% providing they have at least a 25% deposit to put down on the loan. This follows a recent announcement from the Nationwide Building Society, which confirmed that it was cutting some of its mortgage interest rates for new borrowers looking for fixed rate loans.
According to reports the Abbey foresees cuts in its own borrowing costs, and as decided to reduce some of its mortgage interest rates in anticipation of these reduced costs. It is hoping that the recent mortgage reduce plan launched by the government will make it easier and more affordable to raise finance for mortgage lending operations.
One official from the Abbey said: “Abbey had already decreased rates on its flexible rate and tracker mortgages by 0.10% in response to the Bank of England’s recent cash injection. This additional 0.05% reduction anticipates future falls in Libor rates and will further support the Bank of England’s action in helping to bring liquidity back to the UK mortgage market.”
