subject: Mortgage Rates Could Fall Even Further [print this page] Monthly mortgage repayments could be cut thanks to a looming lending war between banks and building societies.
The Government has set aside 80 billion to make it easier for lenders to borrow money, but on the condition that it is passed on to customers.
Its believed that rates could be cut by as much as half a per cent for some mortgage-holders.
Some lenders have already cut rates ahead of the curve, in order to keep customers and pick up new ones.
HSBC, RBS and Santander are three high street lenders that have cut their rates and more are expected to follow.
To switch to a fixed deal now could save home-owners hundreds of pounds.
For example, moving to a five-year, fixed rate deal costing 600 a month could see a 15 per cent reduction thats as much as 100 each month.
The Funding for Lending programme could become an important factor in the recovery of the mortgage and remortgage market.
The funding programme came after experts warned the Government that the numbers of mortgage deals were falling because of the eurozone crisis.
Over the last two years mortgage lending has been low under 10 billion. And that compares with 107 billion in 2007.
More than 100 lenders including Barclays, Lloyds, Royal Bank of Scotland and Nationwide are able to join the scheme and will probably slash mortgage rates.
The Funding for Lending programme is a joint effort between the Treasury and the Bank of England and shows just how important the housing market is to the wider economy.
The scheme protects banks, therefore allowing them to lend more.
Under the programme, banks will be able to borrow the equivalent of five per cent of the amount they currently lend.
But if they increase lending to homeowners and businesses, they will be able to borrow more.
Some of those in areas where house prices have fallen will be in negative equity and its doubtful whether the programme will help them.
And some industry insiders believe more is needed to boost the market; possibly another stamp duty holiday, or removing stamp duty for homes under a certain value.
Max Erskine from remortgagenow.co said: Some rates have already been cut and if this scheme does what is intended and create competition then it could be great for the mortgage and remortgage industry in this country.
I do think more could be done as well, such as stamp duty holidays and of course more homes being built.
This article was first published by remortgagenow.co on the 27th July 2012
