Loans: go for the fix

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After the Halifax, the deluge.

Last week, Abbey National and a host of other mortgage lenders announced that they too would raise their variable interest rates. Increases have hovered between Abbey National's, up from 8.09 to 8.34 per cent, and Bradford & Bingley's, which rose from 8.1 to 8.45 per cent. Greenwich said its variable rate would stay at 8.1 per cent.

The markets expect another rise in base rates next month - a move likely to trigger further mortgage rate increases.

In this climate a fixed-rate deal makes sense. Capital Home Loans offers a five-year fix of 8.85 per cent on loans up to 95 per cent. First Mortgage Securities offers 4.99 per cent fixed until July 1996.

Discounted mortgages, where the loan is pegged to a lower variable rate for a certain period, are also good bets. Mansfield is discounting its rate to 1.99 per cent until December.

Meanwhile, savings rates continue their slow ascent. Derby-shire has launched a three-year fixed-term account, with income options, paying 8.75 per cent. Abbey National has upped rates on its Tessa Second Edition account from 7 to 7.2 per cent on savingsover £6,600. Bradford & Bingley, which offers 6.4 per cent gross on its 30-day Direct Notice Account, is planning to raise its rates next month.

On instant access accounts, Britannia gives 6.35 per cent gross on savings above £10,000, while Yorkshire pays 5.95 per cent on sums over £1,000.

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