Increased activity forces lenders to change rates
Alliance and Leicester and Bank of Ireland (BoI) have both issued product warnings during the past week, while Lambeth Building Society has been forced to withdraw its two-year fixed rate.
Peter O-Donovan, mortgage manager at independent financial advisers’Bestinvest, said: “Lambeth Building Society issued a warning saying it was pulling its two-year fixed rates. The 4.25 per cent product is a really good rate, but pulling it suggests Lambeth can’t cope with the demand. With major lenders, such as Alliance & Leicester increasing their rates, Lambeth Building Society should be congratulated for reducing its rates, and maybe should have anticipated the interest in the product.”
However Matt Smith, spokesperson at Lambeth Building Society, dismissed the suggestion. He said: “This particular mortgage product had a limited tranche of 10 million. When this was sold the range was halted. It was a victim of its own success.”
Sally Lauder, press officer at Alliance & Leicester, confirmed the lender had changed its fixed rate deals. She said: “We re-priced our two, three and five-year standard fixed rate deals. This re-price was a reflection of movements in swap rates and continuing high demand for those products.” Its two-year deal increased by 0.1 per cent to 4.59 per cent, with the three-year fixed deal increased to 4.74 per cent. The five-year fixed deal was increased from 4.74 to 4.84 per cent.
However, an intermediary argued: “When one major lender decides to change its fixed rates one way or the other, some of the market tend to follow,” he said. “It is not always absolutely necessary, but gives competitors in the industry the opportunity to reassess their market placing.”