Mortgage Next has teamed up with Bristol & West to introduce the fixed rate fee saver mortgage.
The mortgage has a fixed rate of 6.09 per cent for loans of up to 95 per cent of valuation until July 31, 2006. After this the interest rate will revert to 1 per cent above the Bank of England base rate for the term of the loan.
Redemption penalties for the mortgage are 7 per cent of the advance in year one, 6 per cent in years two and three and 5 per cent in years four and five. There is a free valuation fee and legal costs are refunded for people who are remortgaging their homes.
The number of people taking out fixed rate mortgages has been declining over the past few years. According to the Council of Mortgage Lenders in 1997 55 per cent of all mortgages were fixed rate. In 2000 this had declined to 34 per cent of all mortgages.
According to Moneyfacts on June 18, 2001, the most competitive five-year fixed rate mortgage is from Leeds & Holbeck Building Society. This has a fixed rate of 5.49 per cent until September 1, 2006 for loans of up to 90 per cent of valuation. Redemption penalties are 6 per cent of the advance for the first three years, falling to 3 per cent in years four and five. Unlike the Mortgage Next mortgage, the Leeds & Holbeck product comes with compulsory buildings & contents insurance.