Mortgages Uncovered

Over the past week many high street branded building societies and banks have just cut the price on their fixed rate mortgages which brings them on-line with the best trackers available on the market.
Mortgage lenders such as Natwest, Alliance & Leicester and Abbey have made these cuts.

Mortgage lenders are now still taking the right to reserve their best interest rates for those people who have large deposits or a very good deal of equity left in their properties.

“We are hoping the new extra money the government put into the system last week will encourage lenders to start lending again,” says Richard Morea of mortgage brokers London & Country. “It is pleasing that the part-nationalised Royal Bank of Scotland has already responded to the government calls to improve lending, while Northern Rock has said it is going to encourage existing borrowers to stay with it, presumably by offering cheaper deals.”

Rather than re-mortgaging, there are now many people who are choosing to remain on standard variable rates (SVR) at the end of their mortgage deal, however, there may be some risks in this strategy.

“If you do decide to do this remember that the price of your house is likely to be eroded further, increasing your LTV,” says Morea. “A higher LTV might mean you can’t remortgage off the SVR later should you want to.”