Before a new base rate announcement is made today, the effects of last month's one per cent cut are still being seen in the mortgage market, as Britannia and Alliance & Leicester cut their fixed rate deals.
Rates on each tier of Britannia's fixed rate mortgage
range are being cut; from tomorrow, the five and ten-year fixed rates will start at 4.69 per cent.
The new range of mortgage
deals include those with and without arrangement fees; the no-arrangement fee deal also comes with a free valuation for all customers and free conveyancing for remortgage
Commenting on the new range of Britannia mortgages
, Tim Franklin, managing director of member business at Britannia, said: "Although interest rates are low right now, with so much uncertainty about what will happen in the future, there is no guarantee they will stay low in the long term.
"With this in mind, opting for a long-term fixed-rate now means borrowers will have the reassurance that their monthly payments will be protected at a more affordable level, regardless of what happens to interest rates
for up to ten years."
Alliance & Leicester has introduced new tracker mortgage
products which start at 3.49 per cent, in addition to new two, three and five year fixed rate mortgages; its three and five year fixes will now cost 4.99 per cent, down from 5.49 per cent, and 5.29 per cent, down from 5.49 per cent, respectively. Both have an arrangement fee of £599.
It is also offering a two year fixed rate mortgage
at 4.99 per cent which does not have an arrangement fee.
"Our mortgage portfolio is expanding and demonstrates that Alliance & Leicester is looking for new business in 2009, offering a comprehensive range of mortgage products at very competitive prices." said Richard Taylor, head of Alliance & Leicester mortgages
In line with the new deals available from A&L and Britannia, Legal & General's Mortgage Purchase Index has found that fixed rate mortgages became cheaper on average in the fourth quarter of 2008; the average two year fixed rate fell to 5.90 per cent from 6.38 per cent in quarter three, and the average three year fixed rate cost 6.30 per cent compared to 7.41 per cent in the third quarter.
Stephen Smith, director of housing at Legal & General said: "Fixed rates for Q4 look a lot cheaper than they were in the summer, with both short and long term rates having come down quite significantly. With average loan-to-values for residential borrowers at around 60% what we are probably seeing is the result of rate drops for ‘low-risk' borrowers, which is the only area of the market that remains competitive."
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