Northern Rock rate cuts - sign that 'competition is returning to home loan market'

Posted: 13 Aug 2008 12:26:50 GMT

The fact that Northern Rock has launched a range of new mortgages is sign that "competition is returning to the home loan market", the Guardian reported.

Northern Rock's mortgage rate cut decision on Monday (August 11th) has followed a number of other lenders, such as Abbey, who have announced reductions on some of their fixed and tracker deals.

Official figures have shown that mortgage rates overall have fallen from June when they had reached an eight-year high.

Mortgage broker John Charcol has said that Northern Rock's decision to reduce its rates was a move designed to improve the quality of its customers.

Ray Boulger, senior technical manager at John Charcol, said: "Northern Rock needs to ramp up new lending of low loan-to-value mortgages because they are not getting enough [customers] in to compensate for what's going out."

The bank has been left with customers who have high loan-to-value mortgages as they have found it difficult to secure deals with any other lender.

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