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UK mortgage lenders playing games again

It has been revealed that the Woolwich, Northern Rock and Abbey have all reduce their mortgage rates in what they are claiming is a return of competition to the sector. Barclays, the parent company of Woolwich, has reduced its rate by 0.45% to 2.79% for tracker mortgages, Northern Rock reduced its two-year tracker by 0.2% to a competitive 2.79% and then we saw Abbey reduce its fixed rate by 0.11% to 3.88%. So are there any catches?

While on the face of it the reduction in UK mortgage rates is very competitive and very interesting, the situation is slightly different when you look at the deposits required. All of the companies in question would require new mortgage customers to lay down a 30% minimum deposit on their new home to be able to discuss the lower rates announced today. This is yet again another letdown to the UK mortgage market with UK banks and UK mortgage providers accused of manipulating customers to increase demand before reducing overall mortgage rates.

Without a reduction in UK mortgage rates there will be no recovery in the UK property market and ultimately it will be a lose-lose situation for financial companies and property owners in the UK. When will UK banks and UK mortgage providers wake up to this fact?

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