UK lender C&G trims mortgage rates

LONDON (Reuters) - British mortgage lender Cheltenham & Gloucester, a unit of banking group Lloyds TSB (LLOY.L), has cut its mortgage rates for the third time in three weeks.

C&G said from Monday it was cutting the rate on its popular 1-1/2 and two-year fixed rate loans by 0.14 of a percentage point to 6.05 percent and 6.15 percent respectively, while the rate on its three-year fixed loans falls 0.1 of a percentage point to 6.19 percent.

All three loans have a 75 percent loan-to-value limit and carry a fee of 995 pounds.

C&G's latest move follows similar reductions on July 28 and July 17, while other lenders including HBOS HBOS.L, mutually-owned Nationwide [NAT.UL], and Woolwich, the mortgage arm of Barclays (BARC.L), have also reduced their rates in recent weeks.

Analysts say the reductions come in response to a slight drop in the cost of interest rate swaps, used to by banks to price fixed-rate mortgages.

However, mortgage costs remain historically high, having risen sharply in the past year as banks stung by the credit crunch seek to conserve capital and protect profits. The abrupt drying-up of cheap mortgage finance has triggered a slump in UK house prices, ending a 10-year property boom.

(Reporting by Myles Neligan; Editing by Paul Bolding)