Coventry announces new capped rates
31 March 2004
Today sees the launch of Coventry Building Society's new capped rate mortgage which is guaranteed for the next 5 years.
The Flexx capped mortgage offers a 5.99 per cent maximum until December 31st 2009, and is available to first time buyers, house movers, and those wishing to remortgage their property.
Among its features, the new scheme has no early redemption charges, a free valuation, and a free remortgage transfer service.
A capped rate allows consumers to benefit from falling interest rates while maintaining a security barrier against rises: their repayments will not go above the certain capped level if the base rate rises, but equally they will be able to make lower repayments should it fall.
Homeowners have, however been recently warned of interest rate rises, with the possibility they may go higher than five per cent next year as the Bank of England tries to curb consumer spending and the housing market.
Peter Spencer, a chief economist with The Ernst & Young Item Club, said: "The consumer sector is far too strong for comfort. In the absence of more taxes, higher interest rates will be necessary to control expansion. We now believe that rates will move significantly above five per cent next year."