Fixed-rate mortgage costs fall

12-Aug-2008

First-time buyers may be set to benefit from reduced mortgage costs as figures from the Bank of England show the price of an average fixed-rate deal has fallen.

According to the Bank, the typical rate for a 75 per cent loan-to-value mortgage that is fixed for two years fell to 6.36 per cent in July, compared with 6.6 per cent a month earlier.

However, despite being "helpful news", Alan Clarke, an economist at BNP Paribas, noted that rates are still higher than they were two months ago, reports Reuters.

"If reports are correct that potential buyers are sitting on their hands in anticipation of possible stamp duty freezes, then to some extent it is academic what the cost of a two-year fixed rate is - new buyers are holding fire," the expert claimed.

Yet in recent weeks lenders have begun to reduce the cost of some of their products, potentially providing opportunities for those looking for their first mortgage.

This week, Abbey announced it was reducing the rates on its five-year fixed-rate mortgages by 0.3 per cent, while also cutting rates on its three-year tracker products by 0.1 per cent.

Additionally, the bank said fees for its two and three-year fixed-rate deals would be reduced to £995 and £1,295 respectively.

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