Cheaper Loans Available to Those with Large Deposits

Mon, 15 Dec 2008

Several lenders have passed on last week’s interest rate cut to borrowers, but only if they can provide a deposit of at least 25 per cent. Abbey, Alliance and Leicester and Halifax have all cut interest rates on mortgage deals, and have introduced new rates, albeit with a reduced loan to value ratio. The new deals offered by Alliance and Leicester are only available with loan to value ratios of up to 75 per cent, whilst the deals offered by other lenders with higher loan to value ratios have much higher interest rates. The biggest winners from the recent cuts are borrowers who can provide a large deposit.

Halifax is an example of a lender offering some deals with higher loan to value ratios, though its three year fixed rate deal, with a loan to value ratio of up to 85 per cent, is accompanied by an interest rate of 6.99 per cent. Abbey’s equivalent offer is priced at 5.84 per cent, however.

Melanie Bien, Director of Savills Private Finance, said, ‘Anyone who borrowed more than 60 per cent two years ago can't remortgage on any product of 75 per cent or under, which rules out the vast majority of deals.
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