Abbey cuts as Bank freezes rates

04-Oct-2007

Abbey has announced cuts to its line of fixed-rate mortgages on the day that the Bank of England held the base rate of interest at 5.75 per cent for the third consecutive month.

The Bank's move had been largely predicted by the financial and property sectors, but the freezes seen in August, September and now October could now be followed by a cut in November, according to the Council of Mortgage Lenders.

The day started badly for first-time buyers when Halifax revealed that prices fell by 0.6 per cent in September, indicating that less new owners were able to get onto the property ladder last month.

But increased speculation over interest rate falls coupled with Abbey's announcement mean that a first-time buyer mortgage is likely to be looking more attractive to many, despite a more negative announcement from HBOS also being made this week.

The lender's five-year fixes will fall by up to 0.36 per cent, with ten-year fixed-rate deals decreasing by up to 0.25 per cent.

"Now is a good time to take out a long term fix. With the current uncertainty in the money markets, we found that nearly 40 per cent of homeowners would choose at a five year fix or longer if they were to remortgage tomorrow," advised Abbey director of mortgages Sue Hayes.

Mortgage firm mform.co.uk, meanwhile, has said that borrowers must be careful about avoiding deposits and taking out 100 per cent mortgages as they could find themselves in negative equity if prices begin to fall sharply.

Lower interest rates on the horizon for first time buyers
http://www.firstrungnow.com/first-time-buyer-news/new-abbey-mortgage-a-3549.aspx

New Abbey mortgage 'a lifeline' for first time buyers
http://www.firstrungnow.com/first-time-buyer-news/new-abbey-mortgage-a-3549.aspx

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