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Cheaper fixed-rate secured loans

20 May 2005

Lenders are continuing to cut fixed mortgage rates, a new survey from Moneyfacts reveals.

The personal financial information service has weighed up the current advantages of fixed rate mortgage deals compared with variable deals, and found that very little difference exists.

Thanks to the recent fall in the money market rates, also known as SWAP rates, lenders are dropping rates by as much as 0.25 per cent.

Chelsea BS, for example has reduced its two-year fixed rate mortgages by 0.20 per cent from 5.19 to 4.99 per cent, while Universal BS has made cuts of 0.25 per cent from 5.20 to 4.95 per cent.

"Currently, market sentiment is leaning towards an anticipated reduction in the Bank of England rate with some economists suggesting a possible reduction as large as 0.50 per cent," remarked the head of mortgages at Moneyfacts, Darren Cook.

The company estimates that a quarter per cent rate cut means a potential saving of £31.25 on monthly repayments, based on a £150,000 interest only mortgage over 25 years.

It also added that with the latest rate cuts, it has seen the difference between fixed and variable mortgage rates becoming almost non-existent.