Continuing from the post below, two mortgage lenders have lowered their interest rates slightly, lowering the cost of mortgage lending, but only for those with large deposits. 

The Nationwide and Abbey are reducing the price of some fixed rate and tracker rate deals. But the biggest drops in mortgage costs are for those who can put down a 25% deposit, which is about £46,000 for an average home in
England and
Wales.  

The Nationwide’s fixed rate deals for house buyers will come down by up to 0.07% on 9 July. Tracker rates will drop by up to 0.27% for those with bigger deposits.  

This will come three weeks after it raised mortgage rates by up to 0.5%.  

The Abbey reduced its rates on 75% loan-to-value fixed rate and tracker deals by up to 0.2%.  

On Thursday, the Bank of England’s survey of lenders revealed that the availability of home loans will continue to fall in July to September.  

Mortgage suppliers are expected to ask for bigger deposits in the coming months, instead of putting up the cost of a mortgage, the Bank’s Credit Conditions Survey showed. This can be seen as a move back to the more cautious but open market conditions that prevailed before the silly season that led directly to the credit crunch.

Requiring a large deposit may seem like a burden for those used to the free and easy lending conditions of a year ago but in fact demonstrates to the mortgage lenders that borrowers are a safe bet. This in turn leads to lowered borrowing costs and less restrictive conditions, which is good news in the long run.

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