Halifax and Woolwich societies drop basic rate to 9.99 per cent

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TWO OF Britain's largest mortgage lenders, Halifax and Woolwich building societies, have dropped their basic rate to 9.99 per cent and introduced large discounts for first-time buyers to try to encourage new buyers into the housing market.

National Savings has announced its new rates for fixed-interest products which will go on sale on Monday. But the building societies have not yet announced their new savings rates following last week's 1 per cent base rate cut.

Halifax Building Society, which has 1.8 million borrowers, has also introduced new discounts for loans which are no more than 75 per cent of the value of the property.

The discount is 0.5 per cent for loans between pounds 60,000 and pounds 100,000, making a rate of 9.49 per cent, and a 0.75 per cent cut for those with loans over pounds 100,000, making a rate of 9.24 per cent.

These rates are designed for new borrowers, but any existing Halifax borrowers who qualified could apply although this would involve a valuation and remortgage fee. The new mortgage rates apply to existing borrowers from 1 November. Borrowers on annual review may ask for lower payments.

Jim Birrell, chief executive of Halifax, said: 'We have sought particularly to offer improved terms to borrowers making larger deposits.'

Woolwich is offering a rate of 7.5 per cent to first-time buyers in the first year. This applies to loans of over pounds 60,000 where the buyer is borrowing less than 90 per cent of the value of the property.

Woolwich borrowers who do not qualify for a first-time buyer's discount can still get discounts for loans over pounds 60,000. Home-buyers borrowing more than 80 per cent pay 9.75 per cent, and those borrowing a lower percentage pay 9.6 per cent.

The new 39th issue of National Savings Certificates pays 6.75 per cent tax free - down from 7.5 per cent on the previous issue. The Capital Bonds rate comes down 1 percentage point to 9 per cent, and the Children's Bonus Bond comes down 1 point to 9.1 per cent.

The First Option Bond pays 8.67 per cent (6.5 per cent net) guaranteed for 12 months, down from 9.67 per cent. The new fixed- rate products will be available by post from Monday and from post offices from Thursday 15 October.