Lower fixed rate mortgages making a comeback
According to a recent report a number of lenders are now starting to introduce lower rate fixed rate mortgages with interest rates of under or around 5%. Finding cheap fixed rate deals has been increasingly difficult since the summer of 2006, when interest rates began to rise.
Following a series of five 0.25% interest rate hikes between August 2006 and July 2007 many people found it impossible to get a fixed rate deal that they could afford the repayments on.
However, although the base rate has only dropped once since this time, experts are predicting a further two cuts by the summer of this year, and another later in the year. With these predictions in mind a number of lenders have introduced lower rate fixed rate mortgages. Amongst the lenders that are offering two year fixed rate deals at under 5% are Yorkshire Building Society, Leeds Building Society, Newcastle Building Society, First Direct and Giraffe Money.
One industry official stated that despite the credit crunch the money markets were loosening up, and this should aid the fall of interest rates on fixed rate mortgages. She said: "The good news for borrowers is that two-year swap rates have finally fallen under the 5% mark in anticipation of another rate cut, so fixed rates are now becoming much more competitive."
She added: 'Even so, trackers will prove best value for most as Bank rate is widely expected to fall to 5% or lower this year. Discounts could also prove as good value if lenders respond to Alastair Darling's call to pass on the full discount of any Bank rate cut.'
26th January 2008