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Wednesday 13th of January 2010
March 26, 2009    

Fixed-rates may go no lower

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by Gill Montia
Fixed-rates may go no lower

John Charcol is advising remortgagers and first-time buyers to consider taking out fixed-rate loans.

A number of lenders have lowered fix-rates this month but according to the mortgage broker, the trend could soon reverse and today’s relatively attractive offerings will disappear.

The firm explains that gilt yields for maturities of five years or more have fallen since the Government embarked on quantitative easing and the decline is being reflected in the money market swap rates that determine the cost of fixed-rate mortgages.

Homeowners prepared to act quickly could consider new five-year fixed-rate loans from both Abbey and Alliance & Leicester at 3.95% or a four-year fix with the Woolwich at 3.99%.

John Charcol’s senior technical manager, Ray Boulger, recommends locking in for at least five years but adds that borrowers currently on tracker loans and low standard variable rates can afford to bide their time.

Earlier this week research from Legal & General put the average cost of a two-year deal down to 4.78%, from 5.90% at the end of last year.

For a three-year fix the average rate now stands at 5.41%, down from 6.30%, in December.

The insurer’s Mortgage Purchase Index also revealed that 72% of residential borrowers are now choosing a fix, compared to 65% in the last three months of 2008.

The findings indicate that borrowers are not expecting further cuts in the Bank of England’s base rate, currently at a record low of 0.5%.

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1 Comment »

  1. Confusing:
    “according to the mortgage broker, the trend could soon reverse and today’s relatively attractive offerings will disappear”
    - To me, this means act now before they go.

    But then “adds that borrowers currently on tracker loans and low standard variable rates can afford to bide their time”…

    So don’t act now if you’re not tied in - wait. That’s all angles covered then….!

    Comment by Gaz — April 2, 2009 @ 4:30 pm

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