The mortgage battle has moved up a notch with the news that the Co-operative bank has launched the UK’s lowest-ever two year fixed rate.
Offering a fixed-rate of 1.09% over two years, the Co-operative’s deal will be available on all mortgages up to 60% LTV. The deal is open to both new and existing borrowers and will require a fee of £1,499.
Additionally, the bank has announced its lowest-ever 90% fixed-rate. Again being a two-year deal, the rate is fixed is 2.64% and requires a £1,499 fee.
A considerable mortgage battle has been rumbling on since last year but seemed to step up gear over recent days, with HSBC and Barclays both launching five-year fixed-rate deals of 1.99%.
Stuart Beattie, head of mortgages at the Co-operative bank, said that, ‘with rates at record lows, it’s a great time for customers to consider taking out a fixed-rate product. We are delighted to offer the UK’s lowest ever two-year fixed rate mortgage, which is ideal for borrowers.’
However, experts are warning lenders to look closely at all fees involved, particularly those to be charged when the fixed-rate period is concluded.
‘If you think you are going to have to move your mortgage again in two years time, you’ve got to think whether you are going to have to pay another fee,’ said Rachel Springall of Moneyfacts.
Customers are also being warned of the reversion rate at the end of their fixed-term agreement. This is the interest that will be charged at the end of the period, and in the case of the Co-Operative, the reversion rate is a fairly high 4.74%.
Some experts have predicted that mortgage rates could sink even lower and Springall believes that, ‘we’re going to see a few months yet of this price war.’