Are you considering taking out a fixed rate mortgage?

Despite the Bank of England’s recent decision to hold interest rates at their record low of 0.5 per cent – the level they have been at since March 2009 – experts are warning that borrowers should move quickly if they want to secure the best fixed rate deals.

Swap rates rise meaning mortgage deals likely to follow suit

Over recent days, swap rates – the rates at which banks lend to each other – have risen to their highest level since April 2010.  Since fixed rate mortgage deals are based on these rates, experts expect the price of fixed rate mortgages to begin to increase.

Mark Harris, managing director of mortgage broker Savills Private Finance, told The Guardian that he believes that banks expect interest rates to rise, and consequently that they are likely to start pricing their fixed rate mortgage deals accordingly. 

“There has been a significant shift upwards in the last week and a couple of lenders have withdrawn their fixed rates with others expected to follow. It is perhaps too early to indicate a trend, but nonetheless borrowers who are sitting on the fence need to pay close attention.”

Now could be the time to fix at the lowest rates

If you are looking for the best fixed rate mortgage deal, the Guardian highlights several products.  Market leading deals include First Direct’s two year fixed rate at 2.69% and five year fixed deal at 3.89%.  Both these products are available to 65% loan to value ratio and they have a booking fee of £999 and £99 respectively.

The Guardian also mentions the RBS/NatWest five year fixed rate at 3.95%.  However, this is only available to 50% loan to value and has a £699 booking fee.  Northern Rock has loans fixed at 2.88% for two years and 4.09% for five years, available to 70% loan to value with a £995 booking fee.

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