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Abbey Axes Deals as the UK Mortgage Market Shrinks
High Street bank, Abbey National withdrawn the last of its 100 per cent mortgages in the UK, after several other rivals also moved to limit their range of home loans.
As many fixed-rate mortgages end this year, this is bad news for those looking for a new deal as any higher repayments make it more difficult to get out of debt.
An Abbey spokeswoman said: "Abbey is seeing high demand following recent competitor moves."
"In order to maintain high service levels on the business it writes, it is simplifying its mortgage range and re-pricing in some areas."
The mortgage deals were withdrawn on 9 April, the latest part of a readjustment which began in February. Virtually, all lenders now require borrowers to put down a deposit before acquiring a mortgage.
Bristol & West still offers something close to a 100 per cent deal but nevertheless it requires any loan being guaranteed by the borrowers’ parents.
The previous week, Britain’s biggest mortgage lender, Halifax, imposed a minimum 5 per cent deposit on new borrowers and only offered its lowest rates to the 70 per cent of these who can find a deposit of at least 25 per cent.
At the same time as the Halifax took action, Nationwide moved to significantly increase its interest rates on new fixed and tracker mortgages.
Their fixed rate interest level increased by 0.2 per cent and they upped it on tracker mortgages by 0.51 per cent or 0.57 per cent.
The mortgage market has reacted strongly since borrowing between financial institutions became harder and more expensive, with interest rates way beyond the Bank of England‘s rate.
First Direct was among the first banks to react, suspending its entire range of mortgages at the end of March. The HSBC-owned firm said that it was a temporary measure which would help it deal with unprecedented demand.
The Co-operative Bank has taken a similar decision, pulling its two-year mortgage deals, while US investment bank Lehman Brothers has pulled out of the British mortgage market entirely.
Loan News posted on 11 April 2008
