Experts have warned customers that are looking to take advantage of the huge amount of low rate mortgages, to be aware of the high fees associated with them.
Recently many banks have announced new low rate mortgages that are aimed at pulling in new customers.
The Co-op Bank has just launched a two year fixed rate mortgage with just 1.09% interest – described as the lowest ever deal of this kind.
HSBC have released a five year fixed rate plan with just 1.99% – also a landmark low.
However if any new customers do want to take out these plans then they will have to pay an upfront fee of £1,500.
This is well over the normal setting up fee of about £920.
Rachel Springall of Moneyfacts said:
“These rates come at a cost. If you think you are going to have to move your mortgage again in two years time, you’ve got to think whether you are going to have to pay another fee.”
The Co-op’s record breaking rate is only accessible to customers who are able to pay a 40% deposit.
Many of these deals also have what is being referred to as a reversion rate. This refers to the rate that your deal will go up to, once your fixed rate period is over.
The Co-op’s deal reverts to 4.74% after the first two years – a relatively high rate.
Many people believe that this mortgage price war could continue for a while, sending rates even lower.
“We’re going to see a few months yet of this price war,” said Springall.
The Bank of England is not expected to raise interest rates until at least 2016. As that date gets closer, mortgage rates are expected to start going up.
Save money on your mortgage by comparing interest rates with MoneyExpert.com.