It's never been easier to borrow

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The Independent Online
The steady downward pressure on interest rates has cut borrowing rates to their lowest levels in a quarter of a century. The main lenders have cut standard variable rates to 7.24 per cent, but borrowers can easily pick up loans at rates well below that.

Bradford & Bingley Direct, who offer mortgages over the phone, are already down to a standard variable rate of 6.25 per cent with no hidden extras to good credit risks. Scarborough Building Society is offering fixed- rate loans at 0.25 per cent for a year, and the Portman Building Society chipped in yesterday by offering fixed rates of just 4.99 per cent until May 1998.

Cheap mortgages are good news for home-owners, but as base rates fall savers have seen their income from traditional savings halved in less than two years. The Halifax were already offering savers just 2.75 per cent before tax on small sums of pounds 500 in instant access deposits,

Investors willing to give 60 to 90 days notice to withdraw money could expect only 3.25 to 3.40 per cent on sums of pounds 1,000 before yesterday, and savings rates seem certain to fall by around 0.25 per cent in the next few weeks.

Savers who have taken out new Tax-Exempt Savings Accounts in recent weeks are also in for a shock. The best interest rates on fixed-rate Tessas are as high as 7.25 per cent, but most of these offers will be withdrawn within the next seven days.

Investors can still get 6 per cent tax-free by investing in Personal Equity Plans (Peps) and up to 10 per cent tax-free in Corporate Bond Peps, but there has to be a possibility that capital values on these investments can go down as well as up.

What you save with the new rate: Mortgage Old rate 7.49% New rate 7.25% Difference

pounds 30,000 pounds 202.44 pounds 198.61 pounds 3.38

pounds 40,000 pounds 270.70 pounds 265.34 pounds 5.36

pounds 50,000 pounds 345.40 pounds 338.46 pounds 6.94

pounds 60,00 pounds 420.09 pounds 411.59 pounds 8.50

pounds 70,000 pounds 494.78 pounds 484.72 pounds 10.06

pounds 80,000 pounds 569.48 pounds 557.84 pounds 11.64

pounds 90,000 pounds 644.17 pounds 630.97 pounds 13.20

pounds 100,000 pounds 718.86 pounds 704.10 pounds 14.76

Figures for 25-year repayment mortgage.

Source: Halifax BS