Halifax is the latest lender to bring down rates

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The Independent Online

There are more signs that the credit crunch may be loosening its grip on mortgage rates, at least for the time being.

The Halifax, the UK's biggest lender, announced on Friday that it would be cutting interest rates on its tracker and fixed-rate mortgages by an average of 0.25 per cent; in some instances, rates will fall by as much as 0.45 per cent. The bank will also be offering a new fee-free mortgage product from Saturday.

The escalating level of mortgage fees has been roundly criticised by financial advisers and consumer groups in recent months as, in effect, introducing rate increases via the back door. The Halifax's move may prompt other lenders to follow suit.

The Halifax hasn't been the only lender to take action of this kind. Yorkshire building society last week cut rates on its range of fixed-term mortgage products by up to 0.45 per cent. It too has started to offer free valuation and legal fees. Newcastle building society has likewise moved to cut its rates.

David Hollingworth from mortgage broker London & Country said the prospects for borrowers were improving: "We can now say there is a downward trend in rates, not just fixed-rate mortgages but trackers and other products. The conditions in the international money markets have eased and this has allowed lenders to start to cut their rates again."

But the good news does seem to be limited mainly to borrowers who have a big deposit. "The juicy deals are still for those who have a loan to value [on their property] at 75 per cent or lower," said Mr Hollingworth. "Despite one or two minor cuts, rates for those people with high LTVs are still relatively high. But generally the news is getting better."

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