Money News

Fixed-rate mortgages getting cheaper

Competition is hotting up in the mortgage market, as lenders make significant reductions to their fixed mortgage rates.

Yorkshire building society launched its lowest ever fixed-rate mortgage yesterday, at 3.19%, as well as making cuts of up to 0.60% across its existing range.

The building society is the latest in a long line of lenders, including Halifax, HSBC and Nationwide, who have cut their fixed rates in recent weeks.

Yorkshire building society’s chief executive, Iain Cornish, said: “The society is taking the opportunity to boost mortgage applications as there are beginning to be signs of an increase of activity in the housing market.”

Ray Boulger, mortgage expert at brokers John Charcol (www.charcol.co.uk), said: “There is undoubtedly an increase in competition, with a number of new lenders currently in the starting blocks waiting for the gun.”

He believes lenders are cutting rates because they are becoming more comfortable with the wider economy - most notably the bounce in house prices and the expectation that interest rates will remain low for some time.

Boulger added: “Additionally, lenders are far less dependent on swap rates for their funding, rather looking towards savers to balance their books.”

Chris Eagle, commercial manager at Creditchoices.co.uk, said: “A reduction in fixed mortgage rates is great news for consumers who want the security of set monthly repayments.

“Compare mortgages now to see if you could save money by switching to a cheaper fixed deal.”