Thrifty Loans

There do seem to be some chinks of light in the darkness of mortgages. After months of soaring rates, and sky-high fees good news is seeping through. Last week a number of lenders announced that they would not increase exit fees once they had been contractually agreed; some lenders even announced that they were going to scrap exit fees entirely. This week HSBC has announced that it is scrapping all fees on its mortgages (exit for arrangement fees on special deals) until October. Even though most deals carry higher than average interest rates, the HSBC are making some attempts to improve things.

Now the prices of fixed rate mortgages are starting to come down. For those who like the security of knowing what their monthly payments will be for at least two years, this should be good news. Of course, there is little doubt that fixed rate deals will go up again if the base rate is increased from its current level of 5.75%. It was left at that rate by the Bank of England in August, but there is still a strong feeling that 6% will be reached later this year.

Woolwich has a fixed rate of 5.89% (down from 6.19%) until the end of September 2009. The fee is £995. On a £130,000 mortgage monthly repayments would be down by £23.

Halifax matches the 5.89% (down from 6.09%) until November 2009, with a free of £1,400. Large deposits are required.

The best two-year fixed deal comes from Cheshire Building Society, with a rate of 5.69% and a fee of £899. Over two years on a £130,000 mortgage that would cost £20,414.

Only available via broker London & Country, Manchester Building Society offers a fixed rate of 5.99% for any period to 30 years, and you can escape at any time without paying a redemption fee. The fee for the mortgage is a potentially high 2%.

Experts think trackers may be a good bet as interest rates may be near their peak, and may drop in 2008. Direct Line offers a two-year tracker, available online only, at 0.28% below base rate (therefore currently 5.47%), with a £599 fee. Anyone choosing a tracker must budget for possible rate rises too.

Related posts:

1. Situation could ease for homeowners on cheap fixed rate mortgages
2. Mortgages and house prices: more bad news to come
3. First time buyers are arming themselves with fixed rate mortgages
4. Chancellor still relying on longer term fixed rate mortgages to stabilise market
5. Base rate increase means higher mortgages and savings rates