Fix your sights on a new mortgage

Thousands of homeowners and potential buyers could make substantial savings on their mortgages if they take advantage of new fixed rates announced by some lenders this week.

While Halifax reduced rates for one-, two- and three-year fixed rates, other lenders including Portman and Derbyshire Building Societies, are now offering five-year fixed deals as low as 4.99%.

Cuts in interest rates over the past year have dramatically reduced the cost of borrowing but until now, the main beneficiaries have been those on standard variable rates and those taking up shorter fixed-term loans.

The latest deals from the Halifax, for example, have reduced some fixed rates by up to 0.35%. They start at 4.80%. But the fresh cuts for longer-term fixed-rate loans could see some borrowers choosing a five-year alternative.

"In absolute terms, now is definitely the time to buy," says Jane Harrison, an independent mortgage broker at London and County Mortgages. "There are some really cracking deals out there."

She adds: "They may go a little lower but it's unlikely to be by very much, so now is definitely the time to take advantage of what's on offer."

A spokesman for Charcol Mortgage Brokers says the 4.99% Portman five-year fixed rate is: "Probably the best there is out there at the moment". The rate is available to people with just 5% deposit. "We believe others may follow but the interest rates announcements due next week will have an impact."

There are obvious benefits for first-time buyers who want the stability of low fixed payments for a longer period, but some brokers believe the new rates are low enough to tempt and benefit people considering re-mortgaging - including some of those moving part of their mortgage to repayment options because of shortfalls in endowment policies.

Jane Harrison says: "It's a purchaser's market.. Research [by the government] shows that only 12% of people changed their mortgage in the past five years. This is madness. In the current circumstances people should re-examine what they are paying out."