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Good News On Loans - Aug 08

Banks cut their rates and relaxed their criteria last week despite warnings that the shortage in home-loan finance will persist until 2010, writes Ali Huusain.

Sir James Crosby's interim report on mortgage funding, published last week, warned the credit crunch would continue to "take its toll" on lending for at least the next two years.

However, as Crosby unveiled the report, Abbey increased its Jumbo loans range with the introduction of two products that offer up to £5m. The minimum loan size is £550,000 and the products come as either a three year fixed rate deal at 6.79% or a three year tracker at 6.34%. Previously, the bank would only lend up to £550,000 on a three year fix.

It is also slashing rates on its twoand three year fixed and tracker deals by as much as 0.15%.

HSBC aslo cut its two, three and five year deals to 6.43%. Arrangement fees are down to £599.