As fixed rates continue to fall, borrowers have been reminded to look at the associated fees such a low rate may attract.
The Bank of England base rate has sat at the historic low of 0.5% for several years, and as they continue to attempt to capture the biggest market share, lenders have begun to make their fixed rates even lower as the entice more people to remortgage.
The warning was issued after the Co-op Bank released a fixed rate for two years at just 1.09%, which is thought to represent the lowest fixed rate on record. However, it comes with a booking fee of £1,500 and a minimum deposit of 40%, both of which need to be factored in when deciding on which rate to go for.
Moneyfacts’ Rachel Springall commented:
“These rates come at a cost, if you think you are going to have to move your mortgage again in two years’ time, you’ve got to think whether you are going to have to pay another fee.”
It is also important to look at the reversion rate once the fixed rate comes to an end, which in the case of the Co-op is a fairly high 4.74%. Experts predict that the price war will continue for a few months yet, as economists feel that the Bank of England base rate will not start to increase until early 2016.
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