Julia Harris, mortgage analyst at Moneyfacts.co.uk, commented: "Fixed rates on the up and disappearing. This week 11 lenders have increased their fixed rate mortgages by up to 0.30% and Kent Reliance Building Society, Alliance & Leicester and Skipton Building Society have withdrawn some of their fixed rate products.
“With inflation hitting a 15-year high, the chance of at least one more base rate increase looks almost a certainty. While many borrowers have already opted for a fixed rate deal, those that haven’t will feel the pinch of any further rate rises.
“As fixed rates rise and lenders begin to withdraw their products, is this the start of the trend we saw following the January rate rise, with rates making a significant move upwards and whole mortgage ranges being withdrawn and replaced?
“For anyone looking to fix their mortgage in the short term, it may be better to do so sooner rather than later.”
How free are Abbey’s fee free deals?
“According to moneyfacts.co.uk, 38 lenders offer fee free deals so it is far from a new option for borrowers. ING models its mortgage range on simplicity and fee free packages, and more recently HSBC announced its whole range would be fee free for April.
“Typically a fee free deal comes with a higher interest rate, but not only does the Abbey deal do this (compared to best buy rates), some options also tie borrowers in for an extended period of 18 months, charging its standard variable rate of 7.34%.
“While it cannot be disputed that these deals offer a solution for those struggling to pay the upfront costs of moving, perhaps there are more competitive solutions for many borrowers, especially as this mortgage is designed for second time buyers who may have equity within their property.
“Don’t be lulled into fee free deals without first checking out the total cost of the deal. You could find yourself paying for your fees and perhaps a bit more. Lenders will not be giving you fees for nothing. You will usually have to pay in other ways.”
