Page last updated at 15:55 GMT, Friday, 4 April 2008 16:55 UK

Shake-up for Halifax's mortgages

Halifax sign
Halifax is the latest of a number of lenders to shuffle deals

The UK's largest mortgage lender, the Halifax, is targeting buyers who can pay larger deposits.

It said new deals would see borrowers who put down a 25% deposit getting a deal with a lower rate than those with less money to offer.

For almost everyone, the highest loan-to-value (LTV) offer will be 95% from Monday, down from 97%.

The move is the latest in a week that has seen a series of providers withdraw or raise prices on deals.

New plans

The Halifax said that it was "rewarding" the 70% or so of all its new mortgage customers who put down a deposit of more than 25%.

Deals for those people will be charged at a rate one-tenth of a percentage point cheaper than they would have otherwise, the lender said.

Those customers will also get a better rate than those who fall into the new tiers of 75% to 90% LTV and 90% to 95% LTV.

The squeeze on first-time buyers, who are often short of money to put down as a deposit, echoes other lenders in the market.

Almost all first-time buyers must find at least 5% of a property's value for a deposit in deals being offered from Monday, rather than 3%.

Taking the average Land Registry house price of 185,616, that is an increase in the minimum deposit of a typical home from 5,568 to 9,280.

Moving mortgage market

The changes will also be adopted across the Bank of Scotland and Intelligent Finance mortgage brands and apply to new mortgages or to people remortgaging, not the Halifax's 2.5 million existing customers.

House keys
The number of mortgage deals on offer generally has fallen in recent days

Across the Halifax's mortgage range, which is increasing from 136 to 201 products, the average increase in interest rates charged is 0.12%.

The second tier of LTV deals will see a 0.14% increase, while the maximum rate increase overall is 0.35%.

The move is further evidence of the squeeze in availability of home loans, an increase in the cost of mortgages, and a plan by lenders to steer clear of those seen as the riskiest borrowers.

The rival Nationwide recently increased its interest rates significantly on new fixed and tracker deals and is offering the best rates to those able to pay a 25% deposit.

Several other lenders have withdrawn or increased the prices of home loans in recent days, most notably First Direct, which was the first to suspend its entire range.

New offers

In a bid to remain attractive to first-time buyers, the Halifax is launching seven or eight new deals aimed directly at these customers.

It says one five-year fixed-rate deal will have a "competitive" interest rate of 5.69% for loans of up to 90% of a property's value, but it has not revealed what the fee would be on this deal.

The Halifax is thought to be aiming for about 20% of all new mortgage custom in the UK, while encouraging some of its riskier customers to go elsewhere when their current deal comes to an end.

Denise Blake, senior mortgage analyst at financial information service Moneyfacts, said: "Despite these moves Halifax continues to offer competitive mortgages, especially for those with a larger deposit.

"Anyone interested must act fast as competitive products are not hanging around for long."


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