Portman Building Society has brought out the 3.99 per cent fixed rate mortgage.
Aimed at first time buyers only, the mortgage has an interest rate of 3.99 per cent for loans of up to 95 per cent of valuation until August 1, 2003.
Portman has given borrowers the facility to repay up to 5 per cent of the original loan amount from August 1, 2001 to August 1, 2006. The mortgage also has an arrangement fee of £300 and a redemption penalty of 5 per cent of the advance until August 1, 2006.
With interest rates stable and having dropped steadily in the first half of 2001, many borrowers have been moving to discount rate mortgages instead of fixed rate mortgages. Based on figures supplied by the Council of Mortgage Lenders, in 1998 45 per cent of all mortgages were based on a variable rate and 55 per cent had a fixed rate. In 2000 this had changed to 66 per cent being variable rate and 34 per cent being fixed rate.
According to Moneyfacts on June 22, 2001, the Portman mortgage and the two-year fix mortgage from Leek United Building Society are the most competitive products. Leek Uniteds product has a fixed rate of 3.99 per cent for loans of up to 90 per cent of valuation. The redemption penalty is 5 per cent of the advance until August 31, 2007. It also refunds any valuation fees.