Two Year Mortgage Deals.

by Mark Johnston

Two Year Mortgage Deals.

It appears then that lenders have been cutting rates to their lowest levels in almost a decade for some of the most popular types of fixed rate mortgages, thus resulting in fixed rates being cheaper than comparable variable rate products.

Therefore there has been a great deal of movement within the mortgage market in recent times.

Martyn Smith, head of mortgage products at Legal and General, said “the mortgage market is currently dominated by fixed rates, which is where the best deals at the moment generally are”.

Chelsea building society, the direct only lender, has recently launched a two year fixed rate mortgage at 1.89 per cent, which is currently the lowest two year fixed deal on the market.

This mortgage deal is available to borrowers with a 40 per cent deposit and it also comes with a hefty £1,695 fee.

Chelsea’s product manager Sunjeev Sahota, says “our 1.89 per cent product will be the lowest two year fixed rate available anywhere in the market”.

It seems that the Chelsea building society, which is owned by the Yorkshire building society, made this move after ING Direct announced their new two year tracker deal.

ING Direct is to launch a market leading 1.94 per cent two year tracker mortgage with a 60 per cent loan to value (LTV) ratio.

This two year tracker product is offered by the lender at bank base rate plus 1.44 per cent. This is a huge reduction from their last two year tracker deal which offered bank base rate plus 1.99 per cent.

According to Moneyfacts, a data firm, this latest product represents the lowest  two year rate ever and comes with a £1,750 product fee, which can be added to the loan or paid upfront and a £195 booking fee.

The lender has also announced that it intends to re-price a number of other products across its mortgage range.

However, some experts are slightly sceptical of this low headline rate from ING Direct as Barclays confirmed in October last year that it was to acquire ING Direct UK’s £10.9 billion deposit book and £5.6 billion mortgage book.

Therefore according to recent reports ING Direct  will stop accepting new mortgage applications from February 2013 following its purchase by Barclays.

Although Barclays has said that it will honour completed applications for the new product. The lender could not confirm though whether it would be adding the deal to the Barclays mortgage product range when the deal was finalised.

While both these deals are very tempting experts have warned that borrowers should ensure that they take the fees in to account, as for some borrowers it may be worth  opting for a higher rate but a lower fee.

Mark Harris, the chief executive of mortgage broker SPF Private Clients, suggests that “lenders often seem to act like sheep, tweaking their criteria and rates in response to their competitors in order to attract business or maintain service levels”.

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