A short shelf-life for fixed-rate mortgages

Published 09th Dec 2009

Building societies are starting to bring out some low mortgage deals — but you’ll have to act fast to snap up any of them.

Coventry — and now Newcastle — have trumped their rivals with some fantastic rates. But Coventry pulled its two-year fix after just a week.

And even though Newcastle brought its new deals out last Friday, they could go soon. The problem for building societies is the limited funds they have available — they can lend only what they bring in from High Street savers — so good rates go quickly.

Coventry’s deal was paid for by those who put cash into its Poppy Bond. Northern Rock withdrew its best mortgages last week.

So finally building societies have a chance to lend a bit of money and make some profit. That said, their margins are tiny.

Newcastle’s rates are good. With just a 20 per cent deposit and a £994 fee you can get a two-year fix for 3.65 per cent. Repayments on a typical £150,000 loan would be £763 and total cost would be £19,306.

The two-year tracker for 20 per cent deposit is 1.99 percentage points above base rate of 0.5 per cent. Repayments start at £680 and there is a £994 fee.

It also has a good five-year fixed rate — 4.89 per cent with a £588 fee — for the same sized deposit. Repayments would be £867 and total cost £52,608.

Source: ' Daily Mail '

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