Lenders Cut Rates on Fixed Home Loans

Mon, 07 Dec 2009

Lenders have cut interest rates on fixed rate mortgage deals this week, though borrowers are being advised to compare any loan deal with tracker rates before taking out a mortgage . The rate cuts follow a drop in swap rates, which indicate expectations of interest rate rises. With many experts predicting that it will be at least 12 months before interest rates rise notably, banks are therefore looking to entice customers to their fixed rate deals while rates remain stable.

The Yorkshire Building Society has cut its fixed rate mortgage deals by as much as 0.30 per cent. Rival lender Alliance and Leicester is now offering a two year fixed rate mortgage with an interest rate of just 3.15 per cent, though there is a maximum loan to value ratio of 70 per cent and a 2 per cent arrangement fee.

Despite the good news of an interest rate cut, lenders are being warned against being sucked in, and advised to instead compare any deal with tracker deals. While Alliance and Leicester’s two year fixed rate mortgage charges 3.15 per cent, its two year tracker has an interest rate of just 1.49 per cent above the Bank of England base rate. It also has a loan to value ratio of 70 per cent, and a £999 fee.
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