Fixed-rate mortgages drop below 4% milestone

17 November 2008

The Bank of England’s ‘shock’ base rate cut seems to be working in borrowers’ favour, with a leading mortgage lender offering a fixed-rate mortgage deal with 3.99% interest.

Barclays, lending under the Woolwich brand, has offered a 3.99% interest rate for one year to borrowers with a 40% deposit, along with a £995 mortgage arrangement fee.

Borrowers will automatically switch to a tracker mortgage at 1.99% above the base rate once the fixed-rate period has ended, The Telegraph reports.

A mortgage expert for Think Money said: “Mortgage rates below 4% could be considered a real milestone for borrowers, and could prompt more lenders to follow suit. Compare this with a typical mortgage from a year ago – let’s say a 6% fixed-rate mortgage of £120,000 – and the savings could be around £140 per month.

“Once a number of similar deals reach the market, it could become difficult for homebuyers to choose between them. As always, it’s important to consider the fees involved – we advise anyone looking for a mortgage to speak to an independent mortgage adviser beforehand.”

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