Fixed-rate mortgages see interest levels drop
Christmas has come early for mortgage borrowers hoping to find a cheap fixed-rate deal at the moment due to reduced rates, one industry figure has claimed.
Independent mortgage lender John Charcol said that those who have been holding out for a quality fixed-rate loan since interest peaked in August are now getting an early Christmas present from the banks.
The comments come after Moneyfacts research revealed that the average interest on a two-year fixed-rate mortgage had fallen below five per cent for the first time in six months, standing at 4.86 per cent.
Drew Wotherspoon, spokesperson for John Charcol, said that although tracker deals are still looking like the best option for the moment, fixed-rate mortgages may pick up in popularity, especially as those on rates secured over two years ago begin to finish their terms.
He added: "However, a note of caution - rates are undoubtedly going to have to increase at some point in the future, so picking the right length of term for a new mortgage is as important as getting the best rate you can.
"Coming out of a fixed rate at the wrong time could be costly. As ever, borrowers would be well advised to seek independent advice on their own specific situation before committing to a rate."
Mortgage lender the Post Office altered the rates on a wide range of its products in order to bring competition to the market recently.
Most of the home loans come with a low £599 arrangement fee and any deals that offer an interest rate for a fixed-length term will automatically revert to the Post Office's 2.49 per cent standard rate.
Written by Karen Eliot
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