Money News
Although swap rates in the money markets peaked three weeks ago and have since come down, the cost of fixed rate mortgage deals has not reflected this change. In fact, rates are continuing to rise.
Darren Cook of Moneyfacts.co.uk, comments, "Borrowers hoping to fix their mortgage repayments for three years are being hardest hit, with the average rate now standing at a staggering 7.25%. Two year fixed rate deals have also not being immune, with the average increasing to 7.07%.
"It is an extremely worrying time for anyone coming to the end of a fixed rate deal. Borrowers coming to the end of a three year fixed rate mortgage deal, looking to fix for another three years could see a £158.23 increase in their monthly repayments (on a £150,000 mortgage), equating to an additional £5,896.28 in true cost over the three years."
Some lenders, including Abbey, Cheltenham & Gloucester and Nationwide have recently announced cuts in their fixed rate mortgage deals. However, Halifax has increased rates by up to 0.20%, while NatWest and Royal Bank of Scotland have increased rates by up to 0.40%.
There are still a handful of sub 6% fixed rate deals, but these come with such high fees that any benefit from having the slightly lower rate is, claims Darren Cook, likely to be wiped out by the fee.
07 July 2008 © Moneyextra.com
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