Competition returns to the lending market

12 October 2009 | By Robert Thickett

After a lacklustre year for lending, last week lenders finally started to compete on rates.

Woolwich, Nationwide, Northern Rock, Alliance & Leicester, Abbey and HSBC all repriced or tweaked their product ranges.

Martin Reynolds, develop-ment director at PMS, says he welcomes the changes and hopes they will be part of a sustained pattern.
He says: “While we are not calling the bottom of the market yet we must give credit where it’s due. It’s good that we are seeing the first step towards more competition.

“The key to a sustained recovery is more consistency in pricing, along with more lenders.”

Woolwich cut rates on one of its tracker deals to 2.79% - the third rate reduction from the lender in two months.

The rate has been cut by 0.45% to Bank of England base rate plus 2.29% and is available at 70% LTV with a £999 fee and a 1% early repayment charge for two years.

Woolwich is also launching a fee-free tracker at 3.19% - or base rate plus 2.69% - with the same 70% LTV.

Andy Gray, head of mortgages at Woolwich, says: “We’re seeing more interest in tracker mortgages, prob-ably related to the combination of the rock bottom and stable base rate and an increasingly competi-tive market.

“These mortgages are com-petitive, have a no-fee option, and are well-placed to take advantage of the increasing customer demand for tracker mortgages.”

Northern Rock also rang the changes, with residential tracker rates now starting at 2.79% at 70% LTV with a £595 fee and fixed rates available from 3.75% at 70% LTV for purchases.

Anth Mooney, director of mar-keting at Northern Rock, says: “Our revised mortgage range and new products show how keen we are to attract new customers.”

Abbey and Alliance & Leicester also repriced, with the latter offer-ing a two-year fixed rate remortgage deal at 4.49% available up to 75%LTV with a £995 fee. The product is also available with a 1% fee option at 4.28%.

HSBC, which does not offer pro-ducts via intermediaries, has extended the availability of its 1.99% two-year discounted mortgage until the end of October. The deal is available at 60% LTV.

The lender says the product, unveiled on September 1, has prompted a sales surge, with the value of discount mortgages sold in September alone totalling £245m.

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