Pity the marketing departments of the building societies, fighting for advantage in a competitive market complicated by the struggle between mutual societies and those opting to becoming public companies.
The demand for new gimmicks and discounts has created an unprecedented range of products. Then there's the Chancellor's insistence on cutting base rates in quarter-point instalments - at a time when competitive pressures force lenders to respond to every change. Meanwhile savings packages have to be juggled to try to minimise the adverse impact of falling interest rates and retain as much existing business as possible.
Response to the latest cut in base rates was swift yesterday. Within an hour Halifax Building Society cut its standard variable mortgage rate from 7.49 per cent to 7.25 per cent immediately for new customers and from April 1 for 2.4 million existing borrowers. It means the interest on an average 25-year endowment mortgage of pounds 60,000 will fall from pounds 346.43 to pounds 335.33 a month after tax relief, saving pounds 11.10.
Abbey National has also cut its standard variable rate from 7.49 per cent to 7.24 per cent with effect from Monday for new borrowers and May 1 for existing borrowers. On a typical repayment mortgage of pounds 60,000 it will reduce monthly payments from pounds 426.51 to pounds 417.62, a saving of pounds 8.89 a month.
The Portman Building Society responded to the latest drop in base rates and the promise of further cuts to come by slashing the rate on new fee- free fixed-rate mortgages between now and May 1998 by a full percentage point to 4.99 per cent. Alternatively borrowers can opt to pay 5.99 per cent fixed until May 1998, with no redemption penalty if they decide to remortgage elsewhere or pay off their loan over the next three years.
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