Homeowners Could Benefit From Latest Fixed-Rate Deals
Released on: August 16, 2011, 5:08 pm
Now could be a good time to find a new fixed-rate mortgage deal, according to financial solutions company Think Money.
With rates on many fixed-rate deals recently falling - and with uncertainty over
when the base rate could rise - fixed-rate mortgages could become an increasingly
attractive option for homeowners.
In July, Yorkshire Building Society cut the rate on its best five-year fixed-rate
deal to a market-leading 3.49%, with an arrangement fee of £995. Borrowers who
don't want to pay this much up front can get a rate of 3.69% with a £95 arrangement
According to Moneysupermarket, the best five-year fixed-rate deals before this
offered rates of 3.79% (Chelsea Building Society) and 3.89% (Nationwide). Even those
deals carried lower rates than many of the two-year deals available only a few
The recent fall in the interest rates available may reflect intensifying competition
between mortgage lenders, says an expert at Think Money.
"Many economists now believe we won't see an increase in the base rate until late
next year, which may have made some mortgage lenders more relaxed about offering
lower interest rates. The fact that some of today's five-year deals offer better
rates than some of the two-year deals available a few months ago suggests that
mortgage providers are serious about their lending.
"This could make five-year fixed-rate deals a very attractive option for many
homeowners. Only a few months ago, such low rates over such a long period would have
"However, it is worth remembering that tracker mortgage deals still tend to offer
lower rates than fixed-rate deals at any given time - so some borrowers may prefer
to go down that route instead."
"Ultimately, the right mortgage deal depends on the borrower's circumstances - and
as such it's often a good idea to seek advice before they make a decision."
Lower rates mean lower monthly payments for homeowners. Furthermore, it could reduce
costs for those considering borrowing more on their mortgage for other purposes, such as debt consolidation.
"Consolidating debts into a mortgage can greatly reduce the month-to-month cost of
repaying those debts, because they are essentially spread over the entire duration
of the mortgage. And when mortgage rates are low, this could prove to be a very
cost-effective way of dealing with debt.
"However, we advise anyone considering doing this to think carefully, as it will
increase the size of the borrower's mortgage. Furthermore, taking longer to repay
the debt may mean the total cost is higher in the long run, and if for any reason
they can't keep up with their payments, they may risk losing their home. But as
long as the borrower is sure they can keep up, it could make very good financial
Notes to Editors
Think Money is one of the UK's leading financial solutions providers, delivering a
comprehensive range of financial solutions, including loan, insurance and banking
Think Money defines its mission as 'To educate, rehabilitate and advise on all
aspects of financial management'.
For more information, visit the Think Money website at http://www.thinkmoney.com/.
Think Money debt consolidation section: http://www.thinkmoney.com/debt/debt-consolidation/
Contact Details: Melanie Taylor
Tel: 0845 056 6480
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