Fixed rate mortgage costs falling

The cost of fixed-rate mortgages continued to fall today with two more lenders cutting the interest rates they charge on the deals.

Nationwide and Abbey became the latest groups to announce they were reducing rates on their fixed-rate deals.

They followed other major lenders such as Cheltenham & Gloucester, first direct, the Post Office and Yorkshire Building Society, which have already cut their rates this month.

The flurry of rate cuts has caused the average interest rate charged on a two-year fixed-rate deal to fall from 4.93% at the beginning of December to 4.86% now.

Nationwide announced the biggest range of cuts, reducing the interest charged on about a quarter of its mortgages by up to 0.29%, with the cost of tracker and fixed-rate deals falling.

The move leaves two-year fixed rate mortgages for people borrowing up to 70% of their home's value at 3.69%, while a two-year tracker product for someone with a 30% deposit starts at 2.64%. Both deals come with fees of £995.

Meanwhile, Abbey cut its four-year fee-free fixed-rate mortgage for current account customers borrowing 75% of their home's value by 0.1% to 4.89%. It also launched new three-year and five-year fixed-rate deals.

A total of 13 lenders have reduced interest rates on their fixed rate mortgages so far this month, with Newcastle Building Society and the Post Office both cutting them by more than 1%.

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