Move fast to fix

By JUSTIN HARPER FOR MAILONLINE
Updated:

 

IS NOW a good time to place your bets on the interest rate roulette and fix your mortgage payments?

We are halfway through the year and after six Bank of England Monetary Policy Committee meetings interest rates have remained unchanged, despite pundits predicting a rise.

But what does this mean for borrowers about to take out a mortgage?

Although interest rates have been unchanged since November 2001, lenders have factored possible rises into their fixed mortgage deals. While some of the best fixed-rate deals have disappeared, plenty of good deals are coming on to the market.

The secret is to be on the lookout for the offers which suddenly appear and be ready to act. Really cheap mortgage rates can suddenly appear when banks and building societies get hold of 'cheap' funds on the money markets, where organisations lend to each other.

Cheap mortgage deals are also launched when a lender wants to undercut the current best rates on the market and top 'best buy' tables.

One such case is Newcastle Building Society, which launched a two-year, fixed-rate mortgage at 4.23% in February which beat the then best two-year rate, Britannia's 4.24% offering. The deal lasted only ten days before it was snapped up by eagle-eyed homeowners.

Steve Urwin, assistant general manager of marketing at the Newcastle, says: 'Some lenders come up with really cheap two-year fixed-rate deals in the hope that borrowers will stay with them when the deal ends. However, some other lenders are much more cautious, assuming the borrower will walk away when the deal ends so they don't offer such good rates.'

Britannia Building Society has been offering the best two-year fixed-rate mortgages over the past six months. But in this time the rate on offer has fluctuated wildly from 4.99% to 4.24%, then back up to 4.89% and now down to 4.79% - even though base rates didn't move. The deal requires a £295 arrangement fee and a 5% deposit.

'Some of the best rates have gone, so don't take the risk of delaying taking a fixed rate,' says David Hollingworth, at mortgage broker London & Country.

Borrowers need to compare fixed rates offered by different lenders because some charge large arrangement fees while others charge none.

• ANDREW and Deborah Adie (above with their children Charlotte, five, Thomas, four, and Ben, two) decided to fix their mortgage for two years to protect themselves against the threat of rising interest rates.

The Adies, of Cuffley, Hertfordshire, took out a fixed rate of 4.38% with Newcastle Building Society - the rate was so low it sold out within days.

Mr Adie, chief executive of Barnet Football Club, says: 'We were pretty keen on fixing our mortgage because we'd read interest rates could start going up this year.' Andrew, 41, took out his mortgage, which stands at more than £100,000, through fee-free broker London & Country.

Click here for our best-buy mortgages.

Most watched Money videos