Lenders hidden mortgage deals
Published ¤ 23/06/2009
Government banks are quietly offering much better deals to homeowners in negative equity than to new borrowers with larger deposits.
Lloyds-owned Halifax, which is backed 40% by taxpayers, and NatWest, part of the Royal Bank of Scotland (RBS) group, which is 70% owned by the taxpayer, are providing mortgages that are about 1.5 percentage points cheaper than their normal range to customers whose outstanding loans are more than their property value.
Until now, the perceived wisdom was that homeowners with the biggest deposits were given the best deals. However, customers at Halifax who owe 120% of the value of the property can secure five-year fixes at 5.64% with a £1,249 fee, but only if they ask. This compares with 7.09% for new customers with a 10% deposit and 5.91% for a buyer with 15%.
Analysts said the negative equity offers were a symptom of banks desperation to keep arrears and repossessions under control. Halifax, in particular, has had thousands of customers in negative equity coming off fixed-rate deals. The number of its borrowers three months or more behind with their payments leapt 60% last year to 2.68% of the loan book, or about 50,000, compared with 1.67% in 2007, and the situation is expected to get far worse.
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