Fixed-rate mortgages get cheaper

David Prosser
Friday 06 May 2005 00:00 BST
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Leading mortgage lenders are cutting the cost of their fixed-rate home loans, amid predictions that interest rates are now less likely to rise significantly over the next two years.

Leading mortgage lenders are cutting the cost of their fixed-rate home loans, amid predictions that interest rates are now less likely to rise significantly over the next two years.

David Hollingworth, of independent mortgage broker London & Country, said: "Earlier this year we were concerned about the rising cost of fixing your mortgage rate, but over the past week several lenders have begun to adjust their prices downwards."

Portman Building Society yesterday became the latest lender to cut its prices. From today, it is offering a two-year fixed-rate deal costing 4.55 per cent a year, down from the previous price of 4.68 per cent.

Other lenders to have announced cuts in fixed rates include Scottish Widows Bank, Northern Rock and Newcastle Building Society. The latter now offers a five-year fixed mortgage rate of 4.85 per cent.

By comparison, the cheapest two-year discounted variable rates now start at 4.45 per cent. "It is now a very slender margin between fixed and variable rates, so there is only a tiny premium to pay for the guarantee that your monthly mortgage repayments won't rise," Hollingworth added.

Melanie Bien, of Savills Private Finance, said: "This is great news for borrowers who need the certainty of a fixed rate to help budgeting - these deals are looking much better than they have recently."

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