End May Be In Sight For Mortgage Market Turmoil
Cheltenham & Gloucester and Britannia Building Society have both announced mortgage rate reductions, and Alliance & Leicester has announced a new product. With lending rates going down on the wholesale money markets, analysts believe the end of the worst of mortgage market turmoil may be in sight.
It may just be that the worst of the turmoil in the mortgage market could be coming to an end, according to analysts.
Their speculation came as two banks cut mortgage rates and another bank launched a new deal.
Cheltenham & Gloucester announced reductions in tracker rates of between 0.2% and 0.26% from today (Monday). And the Britannia Building Society said that it was cutting costs of some of its fixed rate deals of two and three years by between 0.2% and 0.3%.
In recent months the Alliance and Leicester has had to withdraw some of its best deals, but on Friday it put a new two-year tracker onto the market at base rate + 0.98%. That would mean a starting rate of 5.98% at today’s rates. Borrowers need a 25% deposit to take advantage of this deal, on loans up to £1 million.
These new deals come after seemingly endless rate rises over the past few months as banks have found it ever more difficult to raise money. For example, less than two weeks ago the biggest lender in the country, Halifax, put its rates up for the twentieth time in the year.
Analysts believe the Alliance & Leicester announcement to be very significant, with its new product. Although it will take a long time for the mortgage market to return to normality and stability, it may be that June may be looked back on as a turning point.
Last week rates on the wholesale money market seemed to calm down. These are the rates the banks and building societies use to raise money to lend to customers as mortgage loans. The rates are still higher than at the end of last month, but the very fact that may a downward movement is enough for some analysts to hope that the end of the mortgage market turmoil may be in sight.
