Co-op launches lowest ever fixed-rate mortgage deal
The battle in the mortgage market has taken yet another turn today with the news the Co-op has launched a 1.09% two-year fixed-rate loan.
Borrowers looking to take advantage of the "lowest-ever" deal will have to pay a hefty £1,499 fee and have a 40% deposit, but the rate betters the 1.18% currently offered by Yorkshire Building Society.
The move comes as competition in the market intensifies, with lenders attempting to entice buyers with cheaper mortgage deals thanks to low interest rates.
Earlier this month, HSBC announced a five-year fixed-rate deal at a record low of just 1.99% – a deal which has since been matched by Barclays – while this week, Nationwide announced cuts across its mortgage range, with its two-year fixed deal now coming with a rate of 1.49% and its five-year at 2.24%. Both deals come with a £999 fee.
Time to fix
Announcing the deal, Stuart Beattie, head of mortgages at Co-op said: "With rates at record lows, it's a great time for customers to consider taking out a fixed-rate product. We are delighted to offer the UK’s lowest ever two-year fixed rate mortgage, which is ideal for borrowers with larger suit the needs of different borrowers."
Charlotte Nelson, of Moneyfacts, added: "At 1.09%, this two-year fixed rate mortgage is the lowest ever on better time for borrowers to fix their mortgage and secure low monthly payments for a significant period of time."
The Bank of England has maintained base rate at just 0.5% since March 2009 and no rise is expected interest rates until next year at the earliest.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.