Two year fixed rate deal withdrawn by Alliance and Leicester

In the wake of the global credit crunch, which has seen many banks and building societies withdrawing a range of their mortgage deals and tightening up on lending criteria, the Alliance and Leicester has announced that it is withdrawing its two year fixed rate mortgage.

Officials from the building society have stated that the reason behind the withdrawal of the two year fixed rate deal is because they lender cannot keep up with demand, which has far exceeded the ability to supply.

Many banks and buildings societies are now having to withdraw deals and cut back on lending levels as a result of difficulties in getting finance on the wholesale markets in order to fund their lending, which is a situation that has come about as a result of the credit crunch.

An official from the Alliance and Leicester stated: “Over the past few days we have seen a high demand for our 4.99% two-year fixed-rate product and therefore we have taken the decision to remove it from the range.”

In the past month the number of mortgage deals and products available to consumers has dropped dramatically from 7,726 to 5,700. The drop since last July, prior to the onset of the credit crunch is even more dramatic, with the number of deals plummeting by around two thirds from 15,599.

However, some industry officials state that the news could be good for first time buyers because the rapid fall in the range of mortgage products means that house prices will also fall.

One industry official stated: “The cheap and readily available credit has gone so there’s only one place for house prices to go and that’s to fall quite dramatically.”