Mortgage rates seem to be creeping down at last as the Abbey has become the second large lender to announce small rate reductions this week.
The Abbey is reducing rates for tracker and flexible rate mortgages by 0.05% and some fixed rate deals by 0.17%. This follows news that Nationwide is also trimming rates for new customers by 0.3%.
These lower mortgage costs result from the liquidity that the Bank of England pumped into the banking system recently and are in response to the two falls in base rates this year.
This is good news for borrowers, of course, as we can expect other lenders to start to trim their mortgage rates soon, however it has taken these major lenders at least a month to respond to the slightly better situation with inter bank lending and lower base rates.
What is particularly interesting is that major lenders are now favouring borrowers who can offer larger deposits. The Abbey offers borrowers with at least 25% deposits the best mortgage rates.
So in these financially challenging times, it is the low risk customer with savings and good credit histories who stand to benefit.
With falling property prices, and hopefully further reductions in mortgage rates, it seems sensible to stay in rented accommodation for a year or so that you can build as large a deposit as possible and then bargain like crazy for a great value property.