Lenders cut fixed rates

Good news for homebuyers looking for a fixed-rate mortgage deal. Several lenders this week reduced their fixed rates on offer to new borrowers in response to the money markets cutting the cost of borrowing.

The Halifax has cut its rates by up to 0.3%, while several building societies - including Chelsea, West Bromwich and Universal - have reduced their two-year fixed rate mortgages by 0.2%-0.25%. A reduction of 0.25% means a potential saving of £31 on monthly repayments, based on a £150,000 interest-only mortgage, says financial data provider Moneyfacts.

It adds that with these latest reductions, the difference between fixed and variable mortgage rates "is becoming almost non-existent".

This is illustrated by the fact that Newcastle building society's best-buy two-year fixed-rate mortgage is currently priced at 4.49%, while borrowers opting for Portman building society's table-topping two-year discounted variable-rate mortgage will pay 4.48%.

The Newcastle deal is fixed at 4.49% until July 31, 2007, the minimum deposit is 10% - and there is a £420 fee to pay.

Other good two-year fixes include:Derbyshire building society's 4.54% deal fixed until July 31, 2007 (minimum deposit 20%, £420 fee), West Bromwich's 4.54% deal (minimum deposit 5%, £499 fee), and Portman's 4.55% loan, again fixed until July 31, 2007 (minimum deposit 5%, £499 fee - these terms also apply to the Portman's two-year discounted deal).

Moneyfacts says: "Market sentiment is leaning towards an anticipated reduction in the Bank of England rate."