Half year results from the Alliance and Leicester have shown profits at just GBP2 million, down from GBP290 million for the same time last year.
The biggest reason for this massive fall is the writedown of assets that the Alliance and Leicester carried out. This was done because of the worldwide credit crunch that has sent their asset values fall. The good news is that the market had been pre-warned about the write down so, even though it was a little more than was expected, industry experts were not too surprised.
Although investments have proved a difficult area for the Alliance and Leicester their mortgage business appears to be stable as do both personal and business banking. Numbers of mortgages provided are down but the quality is still good meaning bad debts are unlikely to cut into the bottom line.
Halifax has just announced the eighth cut in their mortgage rates this year, with almost half of their mortgage products having their interest rates reduced by up to 0.15 percent.
A typical example is the Halifax 5 year fixed rate mortgage which comes down from a 6.49 percent interest rate to 6.34 percent. The Halifax has also cut fees on some of its products, with the recently introduced stepped tracker mortgage having GBP200 cut off the fee.
The mortgage market is seeing all manner of fluctuations right now, with the base rate and general economic climate leading mortgage providers to look at different ways to get customers on board. The Halifax is doing what it can by cutting rates and fees where they can and are hopeful that demand will increase on the back of them.
The regular Halifax house price report has shown that, in the year to June, property prices have fallen by 6.1 percent.
The forecast by the Halifax for the rest of the year is a fall over the 12 month period of around 9 percent. At the moment property prices are at similar levels to August 2006 though further drops will take values to earlier dates than that.
The chief economist from the Halifax felt that the current situation, with strong employment meant that the future could be alright for property prices, though were a recession to hit the UK this could very quickly change.