Brokers press 'peace of mind' factor

MORTGAGE brokers have a range of fixed and capped deals at historically low interest rates.

They are promoting them to buyers as a way of buying peace of mind - regardless of predictions that, after short-term wobbles, interest rates will be heading down.

Walter Avrili of John Charcol said: 'We don't take a view on rates. When you are looking at peoples' finances, you can't gamble. We go for safety first. We have seen 1988 and I don't want to have to go through that again.'

He is steering buyers away from short-term deals towards longer- term fixed or capped rates.

He particularly recommends the five-year capped rate from Hypo Bank at 9.99 per cent. As it is capped, borrowers will never pay more, but if the bank's mortgage rate drops below 9.99 per cent, they will follow it down. There is an arrangement fee of 1 per cent plus pounds 250, which makes it an expensive deal to set up. But after the first year it only takes one month's notice to get out of it, which is reassuring.

David Duncan, director of residential mortgages at the brokers Chase de Vere, also picks out a five-year deal as one of the best mortgage buys around. This is a 9.85 per cent fixed rate from First Direct. He is not keen on short- term capped rates because of the high fees, and says they amount to little more than a short-term discount on a variable rate.

----------------------------------------------------------------- MORTGAGE RATES: BEST BUYS ----------------------------------------------------------------- FIXED Lender Rate Size Max % Fixed Type Fee Redemption % pounds advance until pounds penalty Chelt & Glouc 9.6 No min 90 2 yrs IO/R 150 3 months' interest Citibank 9.65 30,000 75 Aug 1995 E/P/R 295 5 months' interest in year 1, 3 in years 2 and 3 Bank of Ireland 9.85 20,000 95 pur, 1 Sept E/P/R/IO 260 3 months' 85 rem 1995 interest during fixed period Britannia BS 9.85 15,500 95 30 June E/P/R 50 3 months' 1994 interest CAPPED Lender Rate Size Max % Details Type Fee Redemption % pounds advance pounds penalty Barclays 8.99 No min 90 30 June E/P/R 250 - 1993 Bank of Ireland 8.5 20,000 80 pur 1 June E/P/R/IO 260 3 months' 8.9 95 pur/ 1993 interest 85 rem during capped period Hypo Bank 9.99 15,000 90 1 July E/P 250 + 1% 3 months' 1997 interest year 1, 1 month thereafter ----------------------------------------------------------------- Source: John Charcol Ltd -----------------------------------------------------------------