Mortgages Uncovered

After Bank of England cut its base rate hopes for first-time buyers rose slightly only to be dashed very quickly afterwards after major mortgage lenders made their next move which was to withdraw their most popular mortgage products from the market.

Lloyds TSB’s home loan arm, Cheltenham & Gloucester has immediately withdrawn some of their most competitive and popular “tracker” products which were directly linked to the Bank of England base rate. The largest building society in the UK, Nationwide and the second biggest mortgage broker Abbey are also said to be contemplating similar moves. Literally millions of current homeowners will benefit, however, from the Bank’s dramatic move to cut base rates because it will save them substantial amounts of money on their mortgage repayments.

There are around 4.7 million people who hold an existing tracker mortgage/ paying their lender a standard variable rate and these are the people who will see their mortgage payments cut straight away.

RBS, Halifax and Woolwich have all announced that they are now reducing their SVR rates.
Cheltenham & Gloucester have stated that they have taken some of their tracker deals off the market to “manage demand” due to an outstanding surge of new mortgage applications. Now C&G have instigated the changes to their mortgage products it means that only those people with substantial deposits will now be able to benefit from its tracker deals.

L&C Mortgages broker David Hollingworth, stated:

“Lenders have been increasing tracker rates to improve their profit margins.”

He thinks that this may continue until the banks grow more confident about lending to each other.

Lulu Egerton, of Strutt & Parker estate agents described the base-rate cut as

“a show of commitment towards assisting the battered property market”.

The Work and Pensions Secretary James Purnell has been stating Jobcentre Plus plans at their conference this week and their intention for the recently unemployed is to suggest the interest is paid on people’s mortgages. Under the present scheme, it is only the people whose homes are valued at £100K who qualify, however, this is increasing to include people with homes worth up to £175K. Additionally, the current waiting period is to decrease from 39 weeks to only 12.

“People need to know that there is financial help and support out there if they lose their jobs,”

he says.