The competition in the mortgage lending market continues to develop as several banks and building societies announce cuts to their interest rates for fixed term mortgages.
Nationwide have announced a reduction to their 5 year fixed term interest rate for any property which holds equity of 30% or more. The rate on offer is 3.69%, but incurs a fee of £999, however the rate would be £99 with a higher rate of 3.89%.
Nationwide will also offer a 0.1% rate reduction for any new mortgage applications. Martyn Dyson, a spokesperson for Nationwide, said: “We know from our mortgage consultants and brokers that five-year fixed rate products are popular with borrowers, so our latest rate reduction ensures our deals continue to be amongst the most competitive in the market place.”
Leeds Building Society have also recently announced interest rate cuts on their two year and three year fixed term deals. For their two year fixed term rates, they have announced a rate of 3.5% on properties with 15% equity and 3.14% for those with 20% equity. For their three year fixed term deals, they offer 2.94% for mortgages with 25% equity, 3.49% for 20% equity (a market leader) and 3.79% for 15% equity.
Kim Rebecchi from the Leeds Building Society indicated that the current interest rates were at a historic low and has indicated that many customers are looking for “security, peace of mind and longer term value.” He has indicated that they have offered further cuts across a variety of Loan To Value (LTV) bands. These cuts include a rate of 2.45% for properties with 40% equity and a rate of 2.75% for properties which hold 25% equity.
In response to the current market, the HSBC have also announced a new five year fixed term deal for properties with 40% equity. The rate offered is 3.34%, but attracts a fee of £999.
The Chelsea Building Society have revealed a market leading change to its five year fixed term mortgage for properties with 30% equity. The rate has been cut to 3.29%, although this attracts a higher fee of £1,495. The rate of its five six seven mortgage, which allows the borrower to choose the length of the fixed term, has also been cut from 3.99% to 3.69% – another market leader.
Chelsea have also launched the cheapest available 10 year fixed term mortgage deal. This offers a rate of 3.99% and is available for properties with 30% equity value. However, the fee is £1,495, although, this fee can be reduced to £195 for people who take a 4.19% rate.
However, Lee Karasavass from Prolific Mortgage Finance suggests that there is not much of a market for 10 year fixed term deals, although it’s understandable that in the current economic climate, these deals would be attractive to many people who know that they will not move house in the near future.
Some experts suggest that the new deals indicate that a rise in the base rate of interest may not occur for a while yet and that the low interest rates are adding to the competition and providing a great opportunity for buyers. Customers should take every opportunity to shop around to get the best deal for them.