C&G undercuts big lenders with 9.05%

CHELTENHAM & Gloucester Building Society has again set its home loan rate to undercut the mainstream mortgage lenders.

The C&G rate comes down 0.7 percentage points to 9.05 per cent. New borrowers with at least 20 per cent as a deposit get a one-year discount to bring the rate down to 8.05 per cent. But the society does not have first-time buyer discounts or reduced rates for larger loans.

A spokesman for C&G, the sixth largest building society, said it was able to offer lower rates because it was run on a low-cost basis and did not get involved in other areas. Savers' rates will be coming down at a later date.

Nationwide, the country's third largest lender, also announced lower mortgage rates yesterday . The basic rate is being cut by 0.66 percentage points to 9.29 per cent. Loans above pounds 60,000 drop to 8.99 per cent and those above pounds 120,000 to 8.85 per cent.

The monthly cost of a pounds 30,000 interest-only mortgage with C&G is pounds 169.69, or pounds 150.94 for new borrowers during the first year. Nationwide borrowers pay pounds 174.19 but for larger loans it becomes cheaper than C&G.

Building societies suffered a dismal month in September with mortgage lending and savings flows at dismal levels. Mortgage advances dropped from pounds 1.72bn in August to pounds 446m. A net inflow of pounds 327m in August was turned into an outflow of pounds 2.67bn.