Homeowners urged not to panic over higher mortgage costs

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by Kay Murchie

Homeowners have been warned that rates are due to increase at the same time as many of the more than half a million borrowers, who took out fixed rate mortgages between September and December 2005, finish 2-year deals.

In spite of this, there are still a wide range of new mortgage deals available below 6%.

A spokesperson for the broker, London and Country Mortgages, advised those facing higher rates after deals taken out at around 4.5% 2 years ago, should prepare early and ensure they do not end up on their lender’s standard variable rate.

The spokesperson advised not to worry about coming to the end of a deal but to start planning towards it. Prepare for higher payments if necessary by budgeting for them now and paying the money into savings.

Lenders such as Halifax, Nationwide, Alliance & Leicester and Yorkshire Building Society have cut their fixed rates recently and all offer 2-year fixed rates under below 6%.

Lenders have been offering lower rates and fees on tracker and discount mortgages, making them appeal to borrowers, but financial experts advise people to do their homework and move quickly.

Most lenders will allow borrowers to reserve mortgages up to 3 months in advance and homeowners moving on to standard variable rates from initial deal periods over the next few months are advised to take action immediately.

Mortgage broker, John Charcol, concluded that best buy fixed rates include Britannia Building Society’s 2-year fixed rate at 5.49% with a £999 fee, available at up to 95% loan-to-value.