Discount mortgage deals offer best value

Variable rate mortgages with two and three-year discounts remain the best deals for housebuyers and remortgagers despite continued fears of a rise in interest rates towards the end of the year, according to mortgage brokers.

The Britannia building society is offering a discount of 2.4% from its standard variable rate for two years giving an initial pay rate of 3.49%. By comparison the best fixed rate on offer, according to financial research firm Moneyfacts, is a 4.23% deal from Newcastle building soci ety running to the end of June 2004. Ten other discounted offers from the likes of Woolwich, the Yorkshire, Coventry and Cheshire building societies beat the best fixed rate deal, according to Moneyfacts.

Ray Boulger of brokers John Charcol, says the recent rate freeze is likely to hold for several more months, keeping payments low for discount customers. He says many customers continue to want the security of fixed rates, but could be missing out on better deals.

The Britannia offer is for mortgages of up to 95% of the value of the home and includes a fee of £295. But there are no redemption penalties in the life of the mortgage and free unemployment insurance is available for one year if the loan to value exceeds 90%.

The fixed-rate deal from Newcastle building society is restricted to customers with a 10% deposit or more and fees add up to £445, though it also includes no penalties.

David Hollingworth of mortgage broker London & Country agrees that many customers who can ab sorb changes in interest rates should look at two-year discount deals. "They clearly offer the best value at the moment," he says.

Outside the best buy tables, both mortgage brokers also report that several of the big players continue to offer deals that rank in the top 10, including Abbey National and Halifax, through its subsidiary HMSL.

Countrywide Assured, the UK's largest chain of estate agents, this week reported a strong rise in house sales across the country, giving homeowners further cause for cheer.

The company said the market remained strong in most regions and sales were only falling in areas of the south-east where prices had reached a peak, leaving buyers out in the cold.

"The market for three bedroomed semi-detached houses with a price tag of between £80,000 to £100,000 continue to be in great demand," it said.