On the lookout for a deal in a thousand

Autumn Property Survey: Cashbacks, fixed rates, discount mortgages

THE MORTGAGE merry-go-round has taken a turn for the better this past month, after most of the main lenders reduced their rates, leaving the home-owner with an average pounds 50,000 mortgage pounds 11 a week better off. The cuts took effect immediately for new borrowers and apply from tomorrow to the rest.

The rate falls are typical of recent activity in the mortgage marketplace, which has seen a succession of special offers and deals by lenders desperate to attract borrowers. The reason is simple - new borrowers are disappearing. The Council of Mortgage Lenders reports that the number of people taking out mortgages has virtually halved since the 1980s, falling from 2.2 million transactions in 1988 to 1.2 million last year. Lenders say the normal figure should be around 1.8 million a year and have been actively encouraging borrowers. There are now almost 1,000 different mortgage deals available to new borrowers or those wishing to remortgage. Britain's biggest mortgage lender, the Halifax, offers 19 options.

Spoilt for choice? Maybe, but borrowers can practically go into a building society or bank these days and negotiate their own deals. Do you want to know exactly how much your mortgage repayments are going to be in the next year or two? Then take a fixed rate. Or do you want to be sure that you will be paying less than the standard rate? Then take a discount mortgage.

If you have a sizeable deposit to put down, then your savings will be higher. The small Hinckley & Rugby Building Society, for instance, currently offers a fixed rate of 0.75 per cent until 1 September next year, if you have a deposit of 30 per cent. Or if you can manage just 10 per cent, the Bristol and West can offer a 1 per cent fixed mortgage until 31 August next year.

With these kinds of deals there may be drawbacks, however. Redemption penalties may come into play if you change mortgage lenders, even after the fixed-rate period has finished. For instance, the Hinckley & Rugby will expect you to repay the savings you make on its fixed rate if you move your mortgage within the first three years of its life, which means you will pay for two years after the benefit has discontinued.

The offers are set to continue despite the downward trend in standard rates, according to Jim Chadwick, marketing director of Barclays Mortgages. "Lenders will be reviewing discounts and cashbacks, and they will be fine- tuned, but they won't really be affected by the drop in rates," he says.

It's not just fixed rates and discounts on offer: many lenders will now pay good money in the form of cashbacks to attract borrowers. At the Chelsea Building Society, for example, a borrower can receive 5 per cent of the mortgage balance as a lump sum after making the first month's payment. The Chelsea's Cashback Plus mortgage also offers free redundancy insurance for a year.

This is relevant because the Government introduced changes to income support regarding mortgage payments in the last Budget. The new rules mean that anyone taking out a mortgage after today loses the right to state benefit for the first nine months to cover their mortgage payments if they are made redundant, or if they are unable to work due to illness or accident.

Mortgage Protection Plan insurance to cover these repayments can cost around pounds 7 per pounds 100 of benefit, so looking for deals offering free protection is worthwhile. Research published earlier this month by Barclays Bank shows only one in three people is aware of the changes in benefit, which may account for the lack of a mortgage rush.

If you were not able to sign up for a mortgage before the 1 October deadline, it could be worth waiting a while, according to Walter Avrili at the mortgage brokerJohn Charcol.

"This month's drop in rates has been made by lenders for competitive reasons, but it also serves as a signal to the Chancellor," Mr Avrili says. "The cut will have the positive effect of reducing inflation, but lenders are likely to expect something back. It could be worth waiting until after the Budget before committing to a mortgage, to get the full benefit."

Lenders have urged the Government to encourage home-buying for some time. Celia Rowland, at the Halifax, says: "We've done what we can to kick-start the housing market - now it's up to the Government."

Whatever happens in the Budget, everyone seems pretty sure that the competition among lenders is set to continue. Fixed rates, discounts, cashbacks and other offers are set to be part of the mortgage scene for a long time to come.

Life and Style
Customers can get their caffeine fix on the move
food + drink
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
Mosul dam was retaken with the help of the US
voicesRobert Fisk: Barack Obama is following the jihadists’ script
PROMOTED VIDEO
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Arts and Entertainment
Loaded weapon: drugs have surprise side effects for Scarlett Johansson in Luc Besson’s ‘Lucy’
filmReview: Lucy, Luc Besson's complex thriller
Arts and Entertainment
Jamie T plays live in 2007 before going on hiatus from 2010
arts + entsSinger-songwriter will perform on the Festival Republic Stage
Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
News
Jermain Defoe got loads of custard
i100
News
peoplePamela Anderson rejects ice bucket challenge because of ALS experiments on animals
Arts and Entertainment
tvExecutive says content is not 'without any purpose'
News
A cleaner prepares the red carpet for the opening night during the 59th International Cannes Film Festival May 17, 2006 in Cannes, France.
newsPowerful vacuum cleaners to be banned under EU regulations
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
newsChester Zoo have revealed their newest members
Sport
sportLeague Managers' Association had described Malky Mackay texts as 'friendly banter'
News
The video, titled 'A Message to America', was released a day after Islamic State, an al Qaeda offshoot that has overrun large parts of Iraq, threatened to attack Americans 'in any place'. U.S. officials said they were working to determine the video's authenticity
i100
Life and Style
fashion
Arts and Entertainment
tvSpielberg involved in bringing his 2002 film to the small screen
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.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - IT

£20000 - £25000 per annum + OTE £40,000: SThree: Computer Futures has been est...

Generalist HR Administrator, Tunbridge Wells, Kent - £28,000.

£25000 - £28000 per annum: Ashdown Group: Generalist HR Administrator - Tunbri...

Application Support - Enterprise Java, SQL, Oracle, SQL Server

£45000 - £55000 per annum: Harrington Starr: A well-established financial soft...

Service Desk Analyst (Graduate, Helpdesk, Desktop, Surrey)

Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape