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MORTGAGE UPDATE: Lloyds caps interest-only deals

Lloyds Banking Group has put the cat among the lending pigeons by announcing that it will no longer provide loans on an interest-only basis above £500,000.

The company has also introduced stricter guidelines for borrowers applying for interest-only loans below that level.

It is a topic that is being discussed within every lending institution, and it will be interesting to see if other lenders follow suit.

Meanwhile, the mortgage market has experienced a flurry of activity, with a plethora of exciting products hitting the market as a result of competition sweeping through the dusty corridors of lending institutions.

The highlights are undoubtedly a two-year tracker from just 2.39% (4.79% APR) and a stunning four-year fixed rate deal at 3.99%, (4.70% APR).

The competition represents an excellent opportunity for those with decent deposits or equity to take advantage of securing a lower rate deal.

For borrowers who are still unsure about the best deal for them, there are many lenders who will allow them to have the best of both worlds and take part of the loan on a fixed and part on a tracker basis.

The flurry of deals come as the new coalition government takes shape and prepares for its first budget in a matter of just weeks.

Nevertheless, until then the economic landscape remains unclear, and while there are certainly visible signs of confidence returning in the city, the potential budget cuts and tax rises could prove challenging for some.

In particular, the proposed changes to Capital Gains Tax will no doubt have many a buy-to-let investor glued to their TV or radio to discover the exact rate hikes in the Emergency Budget on June 22.

But for now, click here to view the latest best buys.

Andrew Montlake is communications director at Coreco.

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