Do yourself a favour by homing in on a quick fix
The days of cheaper interest rates are numbered, writes Simon Pincombe
Saturday 04 February 1995
Unfortunately, single-figure rates do not look like being around much longer.
If Kenneth Clarke, the Chancellor, is to cut taxes before the next election while keeping the lid on inflation it is a near certainty that interest rates will return to somewhere nearer their long-term norm.
Halifax Building Society, Britain's biggest lender, and Nationwide are predicting at least two more base rate rises this year.
While mortgage rates are unlikely to reflect the full impact, the standard non-discounted variable mortgage rate will end the year at between 9 and 9.5 per cent. That is still cheap by historical standards.
In the 25 years to January 1994, the standard mortgage rate has averaged 11.25 per cent. More recently, in the five years to January 1994 it has averaged 12 per cent.
If, as looks likely, the variable rate returns to its traditionally high range it will make the fixed-rate deals now on offer more attractive than ever.
This week's base rate rise had lenders and mortgage brokers predicting a stampede for fixed-rate mortgages before prices rise further. Bank of Ireland, for example, said that even before the rise it had to pull staff in over a weekend to cope with the demand for its two-year fixed-rate mortgage at 6.75 per cent.
This time last year you could obtain a five-year fixed rate mortgage for the same rate. Since then the cost of five-year money on the wholesale markets has risen to 8.77 per cent and the industry is still trying to ram home the message that if you can fix for five years at below 9 per cent then it is a very good deal.
Their experience, however, is that home owners are ignoring the long-term monetary signals and going for the cheaper two-year deals.
"Most people assume that the rates will come down again by the next election,'' said Simon Tyler, director of Chase De Vere Mortgage Managment. "They are going into two-year rates at about 6.4 per cent or very cheap 18-month deals at 4.5 per cent."
In spite of the heightened attractions of the fixed-rate deal, it is very much a buyers' market as the lenders battle for market share.
If there is a general rule of thumb it is that the cheaper the deal the more onerous the redemption penalties should the buyer wish to change lenders mid-stream.
Buyers also need to check the lender's variable rate is competitive and whether there is an arrangement fee and compulsory insurance .
The Bank of Ireland deal has redemption penalties of three months' interest payments if you move to new lenders to get better rates before mid-1999.
Of the main lenders, Cheltenham & Gloucester offers a five-year fixed rate of 8.99 per cent.
However, the redemption penalty is a colossal 12 months' interest payment should you cancel in the first year.
Halifax, which as the market leader is arguably not as worried about market share, does not have a five-year deal. It offers a three-year mortgage, fixed at 8.95 per cent for up to 75 per cent of the value of the property. Woolwich has a two-year deal at6.49 per cent for up to 80 per cent of the property's value.
With Nationwide and Halifax this week reporting a further fall in house prices and no significant recovery until well into 1996, home owners are faced over the medium term with a variable liability backed by a dwindling asset.
Most brokers are advising clients to go for longer fixed-rate deals. "The worst that can happen is that you might be paying a little bit more than your neighbours," Mr Tyler said.
If the lack of flexibility on fixed-rate deals is a problem for mortgagees who expect to pay off a chunk of the loan, there are deals linked to the London Inter Bank Offer Rate (Libor).
Brokers have reported a surge of interest since this week's increase. Some of the larger ones are fully staffing their offices over the weekend to cope with demand.
With the cost of five-year money at 8.77 per cent, they say the lenders are making little on a fixed-rate mortage priced below 9 per cent.
But while demand is increasing, there is unlikely to be a shortage of these deals.
BEST DEPOSIT RATES INSTANT ACCESS Telephone Account Notice Deposit Rate Interest or term % interval Yorkshire BS 0800 378838 First Class Access Postal £1,000 5.95 Year Skipton BS 01756 700511 3 High Street Instant £2,000 6.10 Year Britannia BS 01538 391741 Capital Trust Postal £10,000 6.35 Year Northern Rock BS 0500 505000 Go Direct Postal £20,000 6.90 Year NOTICE ACCOUNTS Bradford & Bingley BS 01274 555555 Direct Notice 30 Day (P) £10,000 6.90 Year Bradford & Bingley BS 01274 555555 Direct Notice 30 Day (P) £25,000 7.15 Year Northern Rock BS 0500 505000 Postal 60 60 Day (P) £50,000 7.40 Year Bristol & West (Asset) BS 0800 303330 Asset 90 90 Day (P) £25,000 7.10 Year TERM ACCOUNTS Woolwich BS 0800 400900 One yr fxd rate bond 1 year £500 7.50 fixed Year Halifax BS 01422 333333 Guaranteed Reserve 1 year £10,000 7.50 fixed Year Halifax BS 01422 333333 Guaranteed Reserve 2 year £10,000 8.25 fixed Year Halifax BS 01422 333333 Guaranteed Reserve 3 year £10,000 8.60 fixed Year MONTHLY INTEREST Britannia BS 01538 391741 Capital Trust Postal £2,000 5.70 Month Bradford & Bingley BS 01274 555555 Direct Notice 30 Day (P) £10,000 6.70 Month Northern Rock BS 0500 505000 Postal 60 60 Day (P) £25,000 7.02 Month £50,000 7.16 Month TESSAS (tax-exempt special savings accounts)
Britannia BS 0800 269655 5 Year £8,200 9.25 fixed Year Manchester BS 0161 832 0101 5 Year £8,400 8.00 fixed Year Hinckley & Rugby BS 01455 251234 5 Year £3,000 7.65 Year Barclays Bank 0800 400100 5 Year £1,000 7.50 Year HIGH-INTEREST CHEQUE ACCOUNTS Woolwich BS 0800 400900 Current Instant £500 3.70 Year Halifax BS 01422 333333 Asset Reserve Instant £5,000 5.00 Year Chelsea BS 0800 717515 Classic Postal Instant £2,500 6.00 Year £25,000 6.35 Year OFFSHORE (gross)
Portman Channel Islands 01481 822747 Instant Gold Instant £5,000 6.20 Year Derbyshire IOM 01624 663432 Instant Access Instant £10,000 6.30 Year Derbyshire IOM 01624 663432 90 Day 90 Day £50,000 7.10 Year Halifax JSY 01534 59840 Guaranteed Reserve 1 Year £50,000 7.70 fixed Year NATIONAL SAVINGS Accounts & bonds (gross) Notice or term Deposit Rate % Interest interval INVESTMENT ACCOUNTS 1 Month £20 5.25 Year £500 5.75 Year £25,000 6.00 Year INCOME BONDS 3 Month £2,000 6.50 Month £25,000 6.75 Month CAPITAL BONDS (Series I) 5 Year £100 7.75 fixed Maturity FIRST OPTION BONDS 12 Month £1,000 6.40 fixed Year £20,000 6.80 fixed Year PENSIONER'S GUARANTEED INCOME BOND (Series 2)
5 Year £500 7.50% fixed Month NS Certificates (tax free)
42nd ISSUE 5 Year £100 5.85 fixed Maturity 8th INDEX-LINKED 5 Year £100 3.00+RPI Maturity CHILDRENS BOND (Issue G) 5 Year £25 7.85 fixed Maturity P= by post only. All rates are shown gross and are subject to change without notice.
Source: Chase de Vere Investments PLC - 0171 404 5766. Compiled on 2 February 1995
BEST BORROWING RATES MORTGAGES Fixed rates Telephone Rate/period Max Fee Incentive % advance % £ Hinkley & Rugby BS 01455 251234 1.50 to 1/11/95 60 £195 - National Counties BS 01372 744155 2.99 to 1/1/96 90 £100 £100 cashback Citibank 0181 846 8363 6.45 to 1/3/97 85 £250 - National Westminster Bank Local branch 6.99 to 30/6/97 90 £250 - Northern Rock BS 0800 591500 8.74 to 15/4/00 90 £250 No MIG, free valuation TSB Local branch 9.49 to 31/10/04 95 £250 Free valuation Variable rates Scarborough BS 0800 590547 1.95 for 12 months 95 - Free valuation Northern Rock BS 0800 591500 2.49 to 1/3/96 90 £250 £400 cashback Bank of Ireland 01734 510100 5.55 to 1/4/97 90 £260 2yrs free ASU - FTB Stroud & Swindon BS 01255 427764 6.50 to 31/1/98 75 - - PERSONAL LOANS Unsecured Telephone APR Fixed monthly payments on £3,000 for 3 years % With insurance Without insurance Midland Bank Local branch 15.40 £116.54 £103.14
Abbey National Local branch 15.90 £115.81 £103.77
Clydesdale Bank 0141 248 7070 16.20 £113.94 £103.33
Secured Max advance % Max term Royal Bank of Scotland 0131 556 8555 10.70 70 3 years to retirement First Direct 0800 222000 10.90 80 Up to 40 years Midland Bank Local branch 11.10 90 5 to 30 years TYPICAL OVERDRAFTS Telephone Authorised Unauthorised EAR % EAR % Barclays Bank Local Branch 19.20 29.80
Lloyds Bank Local Branch 19.40 26.80
National Westminster Bank Local Branch 18. 90 33.25
BEST OVERDRAFTS Telephone Authorised Unauthorised EAR % EAR % Woolwich 0800 400900 9.50 29.50
Alliance & Leicester BS 0500 959595 9.50 29.80
Abbey National 0800 555100 9.90 29.50
CREDIT CARDS Telephone Card name Minimum Rate APR Annual income pm % % fee Standard Robert Fleming (S&P) 0800 282101 Mastercard/Visa - 1.00 14.60 £12
Royal Bank of Scotland 0131 556 8555 Mastercard - 1.25 16.00 - MBNA International 0800 062620 Mastercard/Visa - 1.38 17.90 - Gold cards Lloyds Bank Local branch Mastercard £20,000 1.00 14.50 £40
Midland Bank Local branch Mastercard £20,000 1.30 18.10 £35
MBNA International 0800 062620 Mastercard/Visa £20,000 1.38 17.90 - STORE CARDS Payment by direct debit Other methods Telephone pm APR pm APR John Lewis Local store - - 1.39 18.00
Marks and Spencer 01244 681681 1.70 22.40 1.84 24.40
Timecard 01132 471471 1.70 22.40 1.87 24.90
APR=Annualised percentage rate. EAR=effective annual rate. All rates are subject to change without notice.
Source: London & Country. Freephone 0800 373300 Compiled on 2 February 1995
- 1 Katie Hopkins gives rare glimpse of sensitive side with heartfelt open letter to her children penned in case she dies from epilepsy
- 2 Rihanna's Met Gala dress took one Chinese woman 2 years to make, was reduced to omelette meme in 2 seconds
- 3 Top Gear: Jodie Kidd, Philip Glenister and Guy Martin 'in advanced talks' to replace Jeremy Clarkson and co
- 4 #JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
- 5 Women think Irish men are the sexiest, survey finds
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
General Election 2015: Sturgeon claims Scots 'appalled' by Ed Miliband's refusal to work with SNP
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...
Day In a Page
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
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 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