Lowest fixed rates in a decade

Millions of homeowners risk missing out on the best fixed rate deals by delaying tying into a new deal now.

Research by Alliance & Leicester Mortgages reveals that homeowners currently on their lender's SVR risk missing out by not taking the chance to fix now at a low rate. With fixed rate deals now available from as low as 2.99 per cent, Alliance & Leicester Mortgages is urging borrowers who need to remortgage to act quickly in order to secure some of the best deals currently on offer for a limited period only.

The research revealed that eight out of ten (81 per cent) borrowers currently on their lender's SVR deal have no immediate plans to search for a better deal, with a further 264,000 existing SVR holders (14 per cent) planning to wait until interest rates and house prices start to rise again.

Nici Audhlam-Gardiner, Alliance & Leicester Mortgage Director, comments: "It is perhaps unsurprising that some homeowners currently on SVR deals are reluctant to commit to a new mortgage but past experience shows that fixed rates tend to increase in price before the base rate, in anticipation of the base rate increasing. Although SVR deals can be favourable for the short term, once interest rates start to rise they can become unaffordable very quickly. In comparison, as well as giving borrowers the security of low, regular monthly mortgage repayments, opting for a fixed rate deal will also protect homeowners from any future rate rises."

This week Alliance & Leicester is launching a range of new fixed rate mortgages available in the branch only. The 2-year fix at 65 per cent LTV at 2.99 per cent and a 75 per cent LTV 3-year fix at 3.94 per cent. Both have remortgage and homebuyer options available and have a maximum loan size of £1million.

Also launching this week is a fee-free 4-year fix at 75 per cent LTV at 4.69 per cent with a maximum loan size of £550,000.

Nici Audhlam-Gardiner continued: "Given the excellent rates on offer at the moment, it is concerning to see that a large proportion of borrowers sticking on SVR or planning to wait until interest rates and house prices start to rise again before tying into a new deal. By the time interest rates rise again it will be too late and the best fixes will be gone, these rates are only available until 14 June. Also, borrowers run the risk that their LTVs could have increased if their price of their home has fallen in value. Historically we are looking at some of the lowest fixed rate deals in a decade and it is unlikely that they will fall any further so borrowers looking to remortgage or move home should act now."

Alliance & Leicester is also offering customers a special deal on their home insurance. There is 35 per cent off contents insurance when you take out buildings insurance at the same time, available in the branch, online or via the telephone.

For more information, visit alliance-leicester.co.uk