Three home lenders shave fraction from loan rates

HALIFAX, Abbey National, and Cheltenham & Gloucester, three of the UK's largest mortgage lenders, yesterday announced they will shave their home-loan rates for borrowers by 0.1 percentage points.

Their decision means a Halifax borrower with a pounds 60,000 mortgage will save pounds 4.75 on a typical pounds 60,000 loan, which now drops to 6.85 per cent. C&G's rate falls to the same level.

All Abbey National borrowers will see a similar monthly fall, although their tiered interest-rate system means that only loans of pounds 100,000 or more will be charged at 6.85 per cent. Lower-sized loans will pay between 0.05 and 0.1 per cent more. The Halifax and Abbey mortgage cuts will apply from 1 May for existing borrowers; C&G said it had not yet decided on a date.

Yesterday's move follows the decision by the Bank of England last week to cut bank base rates by 0.25 percentage points. At the time, with the exception of Virgin Direct which matched the MPC cut, all lenders said they were "reviewing" their charges.

Ambrose McGinn, Abbey National retail products director, said: "[We] have reduced the mortgage rate by less than the base rate, with savers very much in mind. Rapidly falling rates are good for borrowers but they have a great impact on our savers, who outnumber borrowers seven to one."

Mr McGinn added that borrowers were now paying pounds 95 a month less on a typical pounds 60,000 mortgage than they were six months ago.