People urged to consider discount rates

Present financial conditions may make discount rate mortgages more appealing than fixed-rate products, according to one expert.

Francis Ghiloni, marketing and business development director at mform.co.uk, said that discount rates are currently better value based on "true cost" than other mortgages.

If interest rates fall next year, such mortgages are expected to offer "even better value" for borrowers, he added.

According to the firm, when all associated fees are taken into consideration, the average true cost of the ten "most competitive" two-year discount mortgage deals is presently £138 lower than that of similar two-year fixed-rate products.

"The money markets are banking on rate cuts and lenders are pricing appropriately. Our advice would be that anyone remortgaging should consider discount rates ahead of fixed rates," Mr Ghiloni said.

However, earlier in the month, Drew Wotherspoon of John Charcol suggested that borrowers should "always" choose a tracker mortgage over a discount deal.

Mr Wotherspoon claimed that people taking out discount loans are "solely at the the behest of the lender".

back