MSE News: Lenders cut fixed mortgage rates

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Nationwide and Abbey have become the latest groups to announce they are reducing rates ..."

Read the full story:
Lenders cut fixed mortgage rates

Bayesian_Roller

So, does this mean that 5-year fixes will drop below the multiple of 10 base interest rates? :-)

krazykidskate

Quote
The move leaves two-year fixed rate mortgages for people borrowing up to 70% of their home's value at 3.69%, while a two-year tracker for someone with a 30% deposit starts at 2.64%. Both deals come with fees of £995.

people borrowing up to 70% and someone with a 30% deposit - isn't this the same thing

kmmr

Bayesian_Roller wrote: »

So, does this mean that 5-year fixes will drop below the multiple of 10 base interest rates? :-)

What possible relationship would the overnight rate have to a 5 year rate? You will find that the 5 year rate of lending is related to the 5 year rate of borrowing, not the cost of unsecured overnight borrowing.

opinions4u

krazykidskate wrote: »

Quote
The move leaves two-year fixed rate mortgages for people borrowing up to 70% of their home's value at 3.69%, while a two-year tracker for someone with a 30% deposit starts at 2.64%. Both deals come with fees of £995.

people borrowing up to 70% and someone with a 30% deposit - isn't this the same thing

No.

Fixed rates and tracker rates are not the same thing.

One is fixed.

One tracks (usually the BofE rate) so isn't fixed.



The interesting thing about this change is that Swap Rates, the best guide to the wholesale cost of fixed rate funding, are actually higher than last month.

This suggests that Abbey/Nationwide have had their risk loading reduced or, more likely, that retail savings rates are on the way down over the next couple of weeks.

Gorgeous_George

krazykidskate wrote: »

Quote
The move leaves two-year fixed rate mortgages for people borrowing up to 70% of their home's value at 3.69%, while a two-year tracker for someone with a 30% deposit starts at 2.64%. Both deals come with fees of £995.

people borrowing up to 70% and someone with a 30% deposit - isn't this the same thing

Yes.

People borrowing up to 70% and someone with a 30% deposit - is the same thing.

GG

Gorgeous_George

Winter is traditionally a quiet season for house sales with the Christmas season especially so.

My guess is that rates have fallen in order to grab the headlines but the cost to the lender of the reductions is limited.

GG