Colin Bell, Chief Operating Officer of Purely Mortgages says:
“Two year swap rate money has increased slightly to 5.16% - compare that to the Alliance & Leicester’s two year fixed rate at 4.69% and you will see it is a bargain.”
Commentary:
This week we have seen Alliance & Leicester remove their 5 year fixed rate, adding pressure on their 2 and 3 year rates which will be withdrawn at some point in the near future. Coventry Building Society, Accord Mortgages and Nationwide Building Society have also increased their rates (Nationwide increasing their fixed rates by 0.24%).
Although the MPC has decided to maintain the base rate at the same level this month, the market is anticipating a future rise in the coming months. We are already seeing a marked decrease in attractive two year fixed rate mortgages with increases in rates from lenders in line with rising swap rates. One or two lenders, however, continue to provide competitive deals based on swap positions they locked in before the recent increases in 2 year rates.
Therefore borrowers should be more concerned with their lenders’ standard variable rates, which are exposed to further increases in Base Rate. Purely Mortgages urges people on variable rates to think quickly about remortgaging to a good fix while they are still low. Given the increasing consensus in the market that rates will certainly rise again in the near future, our current product view is still firmly in favour of fixed rates, with the best deals showing savings of over 2% against mainstream standard variable rates.
Purely Mortgages calculates that someone on a £100,000 interest-only mortgage, currently paying an SVR of 6.75 per cent, remortgaging to the best two year fix for the remainder of the term (currently around 4.69 per cent) will save over £4,000 in interest payments or approximately £167 per month over the next two years.
Purely Customer Contact: 0800 4 22 00 33 or via its website at www.purely.co.uk
Current ‘Best Buys’
Fixed/Capped
Lender
Rate
Term
Initial Rate
APR
Reverts To
Incentives
Early Repayment Charges
Portman Building Society
2.35% Fixed
Until 30/04/2007
2.35%
6.2%
6.74%
Beyond term
Alliance & Leicester
4.44%
Until 31/5/07
Then 1% over BBR for 1 year
4.44%
6.0%
6.84%
1 Year tail
Alliance & Leicester
4.69%
Until 31/5/07
4.69%
5.6%
6.84%
Within term
Alliance & Leicester
4.99% Fixed
Until 31/05/10
4.99%
5.5%
6.84%
Within term
Clydesdale
(Semi Exclusive)
4.90% Fixed
2 Years
4.90%
6.8%
6.84%
Free Valuation & Legal Fees
Within term
Discount/Tracker
Abbey
0.31% under Bank Base
2 Years
4.44%
6.7%
6.75%
Within term
Alliance & Leicester
0.01% under Bank Base
2 Years
4.74%
5.8%
6.84%
Free legals and refund of valuation fee for remortgages
Within term
Portman Building Society
2.26% discount from SVR
Until 30/04/07
4.48%
6.6%
6.74%
Within term
Intelligent Finance
0.14 over Bank Base
Until 31/5/07
4.89%
6.0%
5.95%
Free legals and refund of valuation fee for remortgages
Within term
Nottingham Building Society
1.99% Discount from SVR
3 Years
4.65%
6.4%
6.64%
Within term
