Many homeowners and first time buyers welcomed recent news that suggested that fixed rate mortgages with interest rates hovering around the 5% mark seem to be making a comeback. Since interest rates started to rise in August 2006, affordable fixed rate deals have become a thing of the past, with a series of five interest rate rises pushing the cost of fixed rate deals up higher and higher.
However, according to a recent report a number of lenders have recently announced the launch of fixed rate deals with interest rates hovering around the 5% mark, with some just under 5%. Some of the lenders that are offering fixed rate mortgages at below 5% are Yorkshire Building Society, Leeds Building Society, Newcastle Building Society, First Direct and Giraffe Money. This should enable more people – including those due to come off cheap fixed rate mortgages taken out a couple of years ago – to enjoy more affordable finance on their mortgages.
The drop in fixed rates comes despite the effects of the credit crunch and even though the Bank of England has only dropped the interest rate once following the series of recent rises. One industry official stated: “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 also said: ‘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.’
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