Principality Mortgages has introduced the three-year stepped rate discount mortgage.
The mortgage has a discount of 1.66 per cent for the first two years of the mortgage for loans of up to 95 per cent of valuation, giving a payable rate of 4.79 per cent. After this it steps up to a discount of 0.66 per cent until August 31, 2006. The maximum amount that can be taken out for remortgagers is 90 per cent of valuation.
The mortgage also has a redemption penalty of 3 per cent of the advance for the discounted period and comes with compulsory buildings and contents insurance.
The housing market still appears to be buoyant. According to a recent report from the Royal Institution of Chartered Surveyors, in May 2001 4 per cent of chartered surveyors in Britain reported falls in house prices, 32 per cent reported no change and 64 per cent reported rises.
According to Moneyfacts the most competitive five-year stepped rate discount mortgage is from Monmouthshire Building Society. This has a 3 per cent discount in the first year for loans of up to 80 per cent of valuation. It then steps to a 1 per cent discount for the next four years. The mortgage has redemption penalties of the reclamation of the discount, and comes with free accident sickness and unemployment insurance for the first six months of the loan. However unlike the Principality mortgage, the Monmouthshire product is only available in Wales and the border counties.