Fixed rate mortgages still attractive

John Charcol, the independent mortgage adviser, has reported that swap rates for fixed-rate mortgages are continuing to increase and currently stand at around 6.32%.

Many lenders, including Abbey, Bank of Ireland, Halifax and Northern Rock, have been re-pricing their fixed-rates mortgages on at least a monthly basis since the base rate rise of January this year.

The broker expects interest rates to rise again in August and the price of fixed-rate products are already taking that into account.

According to the mortgage adviser fixed-rate mortgages are still attractive, despite the fact that rates are typically two per cent higher than they were in 2005.

Some lenders are offering lower interest rates, such as the Cheltenham and Gloucester’s 5.28%, but in this case the lower fixed-rate is offset by a 2.5% arrangement fee.

Katie Tucker, product specialist for John Charcol, is urging borrowers to remortgage to a rate that makes monthly payments comfortably affordable.

For example, some consumers may prefer to pay a high arrangement fee if it gives them the certainly that monthly payments will be manageable.

She suggests that borrowers who think that interest rates may fall next year and are therefore considering a tracker or discount rate, should ask themselves if they can afford the one or two further rate increases that may occur before interest rates decrease.

For those in a dilemma, the Woolwich offers a one year fixed rate, charged 5.39% interest. After the one year period, borrowers can choose to track at 0.39% above the base rate or can opt for one of Woolwich’s two year fixed rates.

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