Money Insider: Improved mortgage deals as swap rates recede

during the first six weeks of 2011 there was a growing belief that the Bank of England Base Rate would increase sooner than initially anticipated, something that was reflected in the increased swap rates. This resulted in many lenders re-pricing fixed rate mortgages and left borrowers feeling that they had missed the bottom of the market.

However, volatility persists in the market and over the last five weeks swap rates have started to fall back again with the five-year rate down from 3.19 per cent to 2.77 per cent while the two-year rate has dropped from 1.98 per cent to 1.73 per cent.

This is good news for people who are keen to lock into the security and certainty of a longer term fixed-rate mortgage, with some lenders starting to pass these cuts on to their customers.

In the last week we've seen ING Direct cut the rate on its five-year mortgage by 0.35 per cent to 4.99 per cent for a 75 per cent LTV deal with a low fee of £195 to boot. Similarly Nationwide Building Society has chopped 0.4 per cent from its five-year mortgage which is now a best buy for 70 per cent LTV deals at 4.59 per cent with just a £99 booking fee.

Looking at a shorter fixed rate period, rates are being trimmed in this arena too, with Yorkshire Building Society reducing the rate on its two-year home loan by 0.3 per cent to 3.49 per cent for a 75 per cent LTV mortgage with a fee of £195.

There are cheaper borrowing rates available if you're comfortable with a tracker mortgage, but for those with little room for manoeuvre in their monthly budget, the news of lower priced fixed-rate options will be most welcome.

Short-term bonds offering better returns

There has been a marked turnaround in rates being offered for one-year fixed-rate bonds where just four months ago it was a real struggle to find a deal paying 3 per cent or more. Looking at the best buys this week, there are now at least 10 of these bonds offering a return of 3.25 per cent or more, with Aldermore heading the best buys at 3.45 per cent followed closely by AA and FirstSave at 3.4 per cent.

The margin over instant access accounts has improved to 0.4 per cent, meaning an extra £200 per year pre tax on a balance of £50,000.

It remains a tough environment for savers, but it's important to retain the savings habit and to continue to build your nest egg – at least you'll be in a position to take advantage of betterrates when they do eventually pick up.

Andrew Hagger is a money analyst at Moneynet.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

News
peopleComedian launches stinging attack on PM
Life and Style
The collection displayed Versace’s softer side, with models wearing flowers and chiffon dresses in unusual colourings
fashionVersace haute couture review
News
Andy Murray shakes hands after defeating Andreas Seppi of Italy in the third round of Wimbledon, Saturday 4 July, 2015
Wimbledon
Arts and Entertainment
'The Leaf'
artYes, it's a leaf, but a potentially very expensive one
News
Yoko Ono at the Royal Festival Hall for Double Fantasy Live
people'I wont let him destroy memory of John Lennon or The Beatles'
News
Could Greece leave the EU?
news
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

    Gaping hole at the heart of the European Union

    Treatment of Greece has shown up a lack of genuine legitimacy
    Number of young homeless in Britain 'more than three times the official figures'

    'Everything changed when I went to the hostel'

    Number of young homeless people in Britain is 'more than three times the official figures'
    Compton Cricket Club

    Compton Cricket Club

    Portraits of LA cricketers from notorious suburb to be displayed in London
    London now the global money-laundering centre for the drug trade, says crime expert

    Wlecome to London, drug money-laundering centre for the world

    'Mexico is its heart and London is its head'
    The Buddhist temple minutes from Centre Court that helps a winner keep on winning

    The Buddhist temple minutes from Centre Court

    It helps a winner keep on winning
    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'