Fixed rates going up, so get moving fast

Homeowners who want to lock into a low fixed-mortgage rate should get their skates on.

Following signals from the Bank of England monetary policy committee (MPC) that there will be no more base rate cuts in the immediate future, the price of fixed rates on the money markets has risen.

Most lenders are withdrawing the very low rates that have been available for the last few months, replacing them with more expensive versions. The Halifax is withdrawing loans fixed at 4.29 per cent for two years tomorrow evening, while the Portman Building Society raised the rates on its two- and five-year fixed-rate mortgages from 4.15 per cent and 4.45 per cent to 4.25 per cent and 4.54 per cent respectively last Wednesday. Birmingham Midshires has warned mortgage brokers that its loans fixed at 3.89 per cent for two years (with a £1,499 application fee) will also be withdrawn tomorrow at close of business.

Melanie Bien of mortgage broker Savills Private Finance says: 'The message is, if you're looking to remortgage, get on with it.'

Don't panic, though, as there are still some very attractive mortgage deals on offer. Britannia and Yorkshire Building Societies have bucked the trend by offering lower rates than before. Britannia Building Society's loan is fixed at 4.29 per cent for two years, a drop of 0.2 per cent on the society's previous offering. The loan is available for up to 95 per cent of the property's value and has an arrangement fee of £399. Britannia is also offering loans fixed at 4.39 per cent for five years, again with a maximum 95 per cent loan-to-value ratio, and a £499 fee.

Yorkshire is offering a two-year fixed rate at 4.24 per cent. This has an application fee of £495 and a loan-to-value ratio of 95 per cent, although borrowers who take out loans for more than 90 per cent of their property's value will have to pay a higher lending charge.

David Hollingworth of mortgage broker London & Country also suggests that borrowers with a bigger deposit can get an even lower rate from Lambeth Building Society - 4.15 per cent for two years. This has a loan-to-value ratio of 80 per cent and an application fee of £440.

However, borrowers who aren't quite ready to secure one of the low fixed rates currently on offer maybe shouldn't worry too much. David Hollingworth points out: 'Fixed rates have been going up and down like yo-yos this year, and they've been overshooting each time. We may well see rates coming down again.'

He is not alone in believing this. City economists Lehman Brothers, Capital Economics and HSBC all expect several rate cuts over the next year and a base rate of 3.5 per cent by Christmas 2006.

With this in mind, borrowers may prefer an offset capped tracker mortgage from the Clydesdale Bank. Two rates are available - one that tracks at 0.49 above the base rate, producing a current rate of 4.99 per cent, and the other which tracks at 0.54 per cent above base but includes a free valuation. The cap is set at the current rates for two years, so although payments will go down in line with base rate cuts, they will not go up during this period. In addition, both allow you to set any savings against the mortgage to reduce the amount of interest payable.

· Savills Private Finance 020 7330 8588; London & Country Mortgages 0800 373 300