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TODAY'S OTHER NEWS

Fixed rates now cheaper than variable rates

As mortgages plunge to record lows borrowers no longer have to pay more for the security of a fixed rate.

The difference in rates has shrunk to the point where variable rate deals don't necessarily offer the lowest rates, according to new research from Moneyfacts.co.uk.

While the lowest two-year variable rate tracker at 60% LTV charges just 1.08%, the cheapest two-year tracker at the same LTV charges just 1.05%.

Six months ago, the two-year tracker deal cost 1.09% while the fix cost notably more at 1.37%.

As borrowers look to remortgage in advance of the first looming base rate hike, many will be surprised to discover that fixed rates may actually be cheaper.

Charlotte Nelson, finance expert at Moneyfacts.co.uk said: “A variable rate tracker mortgage can no longer be considered the best way to ensure lower monthly repayments.

“In fact, the lowest two-year fixed rate mortgage already just undercuts the lowest two-year variable tracker deal.”

Nelson said if base rate rises by 0.5% the lowest variable rate for a £150,000 mortgage at 60% LTV would cost £442 a year more than the lowest two-year fixed rate.

"With record lows being seen across the market, borrowers can essentially opt for an all-time low rate without the risk of it rising in the near future."

But time is running out for borrowers to take action. Nelson said: “These highly competitive fixed rate mortgages will only be on the market for so long and once they’re gone, they’re gone.

“Mortgage holders therefore need to act fast to secure the best deals while they have the chance.”

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