THE Royal Bank of Scotland this week bucked the trend in the mortgage market by trimming rates on its most popular mortgages.
The bank, one of the UK's big five and owner of high street bank NatWest, is offering interest rate reductions on all fixed-rate and tracker mortgage deals for both new and existing customers. The biggest cut – by 0.3 percentage points, to 5.89 p
er cent for a five-year fix – will apply only to new mortgages with a maximum loan-to-value (LTV) of 75 per cent. For remortgagers, the five-year rate for the same LTV falls to 6.09 per cent. There is also a 0.15-point reduction on five-year remortgage deals with a 90 per cent LTV, taking the rate to 6.14 per cent, and 0.1-point cuts on two-year fixes, reducing the rates to 5.79 per cent and 6.09 per cent for LTVs of 75 per cent and 90 per cent respectively. The fee for all deals, which are only available through RBS and NatWest branches, is £999.
While the cuts affect only a small proportion of customers, Eamonn Rice, chief executive of Edinburgh-based online mortgage company Mform, said they were welcome after months of rate rises and increased restrictions on mortgages. "Even though it's only a small part of the market, it's positive. But the reality is that unless rates fall more drastically, the market won't improve," Rice said.
Rice pointed out that for borrowers with sufficient equity, reasonable deals have been available throughout the credit crunch.
"I'd be surprised if we don't see more deals like this as the large lenders, who have the resources, look for market share," he said. "They'll only be aimed at higher-deposits or lower LTVs, but we'll end up with a more sustainable and realistic mortgage market."
The full article contains 322 words and appears in The Scotsman newspaper.
