It's time for first-timers to get fixed up

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The Independent Online

First-time buyers have had little to shout about of late, but this looks set to change as the housing market cools and prices reach more realistic levels.

First-time buyers have had little to shout about of late, but this looks set to change as the housing market cools and prices reach more realistic levels.

Moreover, those looking for peace of mind on their mortgage repayments can now benefit from cheaper fixed-rate deals, as lenders have begun repricing their products.

The cuts are being introduced in response to indications that the next move in interest rates could be down.

As expected post-election, the Bank of England's Monetary Policy Committee decided to leave the base rate unchanged at 4.75 per cent last Monday.

But some signs suggest a cut could come sooner rather than later - such as last Wednesday's admission from Mervyn King, the Governor of the Bank of England, as he presented the Inflation Report, that he was surprised at the speed of the slowdown in retail spending.

Swap rates - the interest rates set by the wholesale money markets, and used by lenders to determine the cost of fixed-rate mortgages - are already pricing in a drop in borrowing charges. They have fallen to their lowest level in 14 months.

Fixed-rate deals are falling accordingly, with two-year fixes now available for as little as 4.49 per cent from the Newcastle building society.

The Portman building society also has a competitive two-year fixed-rate deal at 4.55 per cent, and a three-year fix at 4.69 per cent.

"This is great news for first-time buyers who require certainty to help with budgeting," says Mark Harris, a mortgage broker at Savills Private Finance. "And with lower fixes in the pipeline, we expect this news to get even better."

Borrowers looking to remortgage also stand to benefit, says James Cotton from broker London & Country.

"If you're coming off a low two-year, fixed-rate deal and want to avoid going on to your lender's standard variable rate, then you can save money by opting for another fix."

While repayments will rise, they will still be far cheaper than paying your lender's SVR, he says. "If you're looking for security, now is the time to fix."

For those who believe interest rates will come down even further (and who will not, therefore, want a fixed rate), some competitive tracker deals are available. Nationwide building society, for example, has a two-year deal at 4.79 per cent.

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