Fixed rate mortgages below 5% on offer again

For the first time since January this year, lenders are offering rates dipping below 5%. Reaction to these offers are mixed however since there is a general assumption that interest rates must be very close to their ‘peak’ figure (if indeed they have not already done so).

This point of view is supported by the fact that the interest rates remained steady at 5.25% last week.

On the other hand there are those who think that perhaps one more hike may be expected, say to 5.5%, since Jan figures were so buoyant.

Quoting Simon Ward at New Star ( an investment house),”We remain of the view that a cooling economy and better inflation figures will head off another rate increase”. It is worth noting that Simon was the only analyst to predict the February rise, so there may be something in what he says.

Another indication which may suggest we are close to or have reached the peak is that the rate at which the lenders borrow to cover their fixed deals, has dropped.

In the last month alone 2year rates have been lowered from 5.82% to 5.6% and now there are several 2year fixed rates to choose from which are below 5%. Derbyshire building society is taking it one step further and offering customers the chance to lock in for ten years at 4.95%.

Fixed mortgages are great for security and peace of mind and are unlikely to become any more expensive. If, however you have ridden out the storm thus far with the belief of possibly one more rise, then the general feeling is that the only way for the interest rates to go is down. With that in mind there are some super offers on variable rates. One example is a 2year tracker from BM Solutions at 0.81 points below bank rate which puts it at 4.44%. This product carries a 1.5%fee and is recommended for borrowing under £200,000. For sums greater than that, they offer a 2year tracker at 0.51 points below bank rate, sitting at 4.74% and for this the fee is£1,499.

Some fixed rates and variable ones too are detailed below to help you choose what might suit you best.

• Stroud & Swindon offer a fixed rate at 4.89% (including free valuation and legal work). The fee is £1,999 and top amount you can borrow is £250,000.
• Bradford & Bingley (B&B)offer a fixed rate at 4.99% with a fee of £1,299.
• Abbey AND Halifax both offer fixes at 5.14% for sums under £200,000 or greater than £250,000. Both have a £999 fee and include free valuations and legal work.
• Derbyshire offer a 10year fix at 4.95%, but read the small print as there are penalties which may be applied throughout the term.
• B & B also offer a 10 year term at 5.29%, however penalties only apply for 5years.