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.

News
people And here is why...
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
Voices
voicesBy the man who has
Sport
Arsene Wenger tried to sign Eden Hazard
footballAfter 18 years with Arsenal, here are 18 things he has still never done as the Gunners' manager
PROMOTED VIDEO
Life and Style
The new Windows 10 Start Menu
tech
Arts and Entertainment
Kristen Stewart and Robert Pattinson star in The Twilight Saga but will not be starring in the new Facebook mini-movies
tvKristen Stewart and Stephenie Meyer will choose female directrs
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
books(and not a Buzzfeed article in sight)
News
ebooksAn unforgettable anthology of contemporary reportage
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
Arts and Entertainment
Twerking girls: Miley Cyrus's video for 'Wrecking Ball'
arts + ents
Arts and Entertainment
Ed Sheeran performs at his Amazon Front Row event on Tuesday 30 September
musicHe spotted PM at private gig
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
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 - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?