View more on these topics

Mansfield undercuts the opposition

Mansfield Building Society has undercut the opposition with its five-year discount mortgage.

Mansfield has given the mortgage a discount rate that steps down over the first five years of the loan. For the first year it has a 2.5 per cent discount, for the second year it has a 1.5 per cent discount, for the third year the discount drops to 1 per cent and then for years four and five it goes down to 0.5 per cent. It therefore starts life with an initial rate of 3.99 per cent for loans of up to 75 per cent of the price of the property.

Mansfield offers three months’ free buildings and contents insurance and no arrangement fee. Mansfield will also refund any basic valuation fees, but only if their valuation experts are used.

If the mortgage is redeemed during the discounted rate period, then borrowers will have to pay a redemption fee of 3 per cent of the advance.

Gloomy predictions of a slowdown in the housing market have so far been firmly squashed by strong sales. According to the Council of Mortgage Lenders the total number of mortgage sales rose from 188,000 in July 2001 to 206,000 in August. Breaking the figures down further, we see that there was also a slight swing towards fixed-rate mortgages, with the proportion of variable and discounted-rate mortgages falling from 66 per cent in July to 61 per cent in August.

One reason for this could be that many borrowers thought interest rates had gone as low as they could in August and wanted to move to a fixed rate as they were afraid of rises in rates. However, following the destruction of the World Trade Centre and the economic turmoil that resulted, the Bank of England cut interest rates again in September.

Taking a look at the competition that this mortgage will face, Moneyfacts says this is the lowest five-year discount rate mortgage on the market on September 20, 2001. Its nearest rival is the five-year discount mortgage from Norwich & Peterborough Building Society. This has a discount of 1.45 per cent in the first five years for loans of up to 90 per cent of valuation. It also has a redemption penalty of three months’ interest during the discounted period.

Recommended

Bristol & West goes for the triple index approach

Bristol & West has added to its range of products with the introduction of the six-year guaranteed equity bond (GEB) Isa.This is a guaranteed Isa that can be taken out as one of two versions, either as a mini-cash or a Tessa only Isa. It is aimed at cautious investors looking for a product that […]

Friends Provident – Investment Portfolio Bond

Monday, 17 September 2001.Type: Unit linked bond.Aim: Growth or income by investing in a choice of four portfolio&#39s,cautious, balanced, managed, ethical or a choice of 10 out of 16 unitlinked funds.Minimum investment: £5,000.Fund links: Managed, property, investment trust portfolio, UK indextracking, Index linked, Pacific basin, stewardship managed, fund offunds, overseas equity, UK equity, fixed interest, […]

Another Towry man for Wentworth

IFA retirement specialist firm Wentworth Rose has appointed Malcolm Thomas as head of pensions, the second recruit from Towry Law in the last month. Thomas joined Hogg Robinson in 1994 and moved to Towry last year as sales manager leading its retirement advice teams. Towry is requiring board director Tudor Taylor to honour his contract […]

Only 36% pass first half-credit K10

Only 36 per cent of the 635 advisers who took the first sitting of the Chartered Insurance Institute&#39s new K10 paper covering retirement options passed the half-credit qualification. The CII is disappointed at the low pass rate but says it illustrates the standard has not been watered down by creating half-credits at an AFPC level.

The curse of long-term cash

Trevor Greetham, Head of Multi Asset at Royal London Asset Management, reveals why clients should be seriously concerned when short-term holdings of cash turn into a long-term investment. There is nothing wrong with holding wealth in the form of cash on a short-term basis. For many people capital stability is important and access to ready cash […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment