Money Insider: Fixed rates hold growing appeal for homeowners
Saturday 20 August 2011
The volume of fixed rate mortgage searches on Moneynet climbed 22 per cent in July compared with the previous month. It seems consumers are again starting to favour the comfort of longer-term security over a lower cost variable rate.
This change of heart has undoubtedly been triggered by some of the ultra low rates we're now seeing. Some of these fixed deals have now reached a level that makes them a serious alternative to standard variable rate and discounted variable rate deals.
To give you a flavour of some of the keenest fixed rates available, Chelsea Building Society has a two-year fix at 2.69 per cent with £195 fee (maximum 70 per cent LTV), Yorkshire Building Society a three-year deal at 3.14 per cent with £95 fee (maximum 75 per cent LTV) and, if you're looking longer term, you can get 3.69 per cent fixed for five years from Yorkshire with a fee of £95 (maximum 75 per cent LTV). I don't see fixed rates falling much further but some banks have yet to respond to recent falls in swap rates, so there are likely to be other lenders launching rates coming close to those mentioned. It's still not an easy call for mortgage borrowers, as there are pros and cons for both variable and fixed rate products, but as always it's important that consumers seek guidance based on their own financial situation.
With a fixed rate, you may find yourself currently paying over the odds when compared with some variable rate products, but the peace of mind offered by a fixed affordable monthly repayment, particularly over a longer term, will still be the key reason to purchase for many.
New insurance shouldn't be dismissed because of PPI fiasco
It's not surprising that consumers are hesitant about signing up for any form of insurance protection in the wake of the widespread bad press surrounding the payment protection insurance (PPI) mis-selling scandal.
However we now have a situation where there is a general lack of trust in protection cover and sadly people who may need valuable back up won't even give it a second thought. Even though billions of pounds of compensation are being paid out by the banks, the image of protection cover in its various guises remains in shreds.
With the Government warning that further painful and unavoidable cuts are still to come, people will be concerned about how this will impact on jobs and, in times of such economic uncertainty, income protection cover can prove to be a vital safety net.
This week, Nationwide Building Society launched a short-term income protection policy entitled Lifestyle Protector. It differs from the old style PPI in many ways. With PPI you had to pay the full premium up front, it was added to your loan and you were charged interest on it. If you repaid your loan or cancelled your policy early, you lost out financially as the refund wasn't made on a pro-rata basis.
Overall, the PPI product was seen as a very poor deal for the borrower while being a huge profit generator for the lenders. The new Lifestyle Protector offers more flexibility and choice for someone looking to protect their finances and, more importantly, you can tailor the cover so you only pay for what you need.
You can choose to protect a set monthly amount (not just loan or mortgage commitments) up to a maximum of 60 per cent of your gross monthly income. You select whether you need protection against sickness, unemployment or both and choose how long you want to wait before the policy pays out, and the longer you wait the cheaper the cover becomes. Premiums are payable monthly, but unlike PPI of old you can cancel at any time without any financial penalty.
Nationwide staff may have a battle trying to win over the doubters, but it's a decent product and worth people getting a quick quote to understand the cost and benefits before writing it off. It's a shame that PPI has left such a bad taste, and it's important that people understand this is not more of the same, but something that will help to protect themselves and their families, without costing a fortune.
Take a couple of minutes and ask yourself, "If I was unable to work for the next six months, could I continue to pay the household bills?" If the answer is no, then considering some form of income protection could be a financial lifesaver and definitely warrants a closer look.
Andrew Hagger is an analyst at Moneynet.co.uk
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Dirty tricks in a divorce can cause some nasty surprises
10 tips for taking out a personal loan
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Donald MacInnes: My wasted hours in the retail deserts of Dixons-Carphone
Pension firms must ask consumers more questions, says City Watchdog
- 1 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 2 Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
- 3 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 4 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 5 Isis publicly behead man in Syrian town square for 'insulting Allah' as he screams for help
9 reasons Greece's experiment with the radical left is doomed to failure
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village