Print friendly version 14 May 2008

Mortgage market "coma" could end soon

Other mortgage lenders are likely to follow Nationwide's lead in cutting rates on fixed-rate deals, according to comparison site Money Expert.

Nationwide has announced it will reduce the rates on its two-year and five-year fixed-rate mortgages by up to 0.3% from 16 May 2008. Matthew Carter, divisional director for mortgages at Nationwide, said the reductions were a result of a recent fall in the rate at which banks borrow from each other to fund their lending to consumers.

Sean Gardner, spokesperson for Money Expert, said: “Nationwide says it is cutting rates in response to the Bank of England’s £50 billion rescue deal for the mortgage market aimed at encouraging lenders to start lending again, which is a sign that at last something is starting to move.”

The move is a welcome sign that the mortgage market is coming out of its coma, according to Gardner, with more lenders likely to follow suit. However, he added that availability of mortgage products remains a problem for borrowers.

"The Council of Mortgage Lenders figures show lending for house buying at their lowest since 1975 and there’s very little hope that things will get better during the rest of the year.

“If you've not got a substantial deposit nowadays or equity in your house then your choices are still severely limited. On average, if you are remortgaging you now need a deposit of 15.5 per cent if you take out a fixed or variable mortgage.”

Use our mortgage caluclators to comapre repayments on different deals

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