Abbey latest to shave its loan rates

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ABBEY became the latest lender to announce it was cutting its mortgage rates in a further sign that competition was returning to the market.

The group is shaving 0.2 percentage points off its two-year fixed-rate deal for people borrowing 70% of their home’s value and 0.1 points off its three-year fixed-rate loan, leaving rates on both deals at 5.69% for people who pay a £995 arrangement fee.

Abbey also said it was launching a new range of low-fee deals today for homeowners with a 40% deposit and looking for loans of up to £250,000.

Slashed

Abbey followed closely behind rival Alliance and Leicester, which also slashed its mortgage rates last week.

The group said it was cutting the cost of all but one of its mortgage products, reducing rates by between 0.1 and 0.55 points.

A&L’s biggest reductions were on fixed-rate mortgages, with the group reducing its two-year product to 6.69% from 7.24% for people borrowing 85% of value and paying a £599 fee.

It is also lowering the cost of its two-year tracker deal by 0.1 of a point to 6.39% for people with a 15% deposit, with the arrangement fee on this loan down from 2% of the sum borrowed to 1%.