Co-op's new fixed-rate mortgage

Tuesday, 04 March 2008 12:00

The Co-operative Bank has launched a two-year fixed-rate mortgage with the same rate as its best-buy tracker deal.

The launch of the fixed deal with a 5.24 per cent rate means customers can now choose between a fixed and a variable product on the same terms. The bank's two-year tracker is currently at 5.24 per cent plus 0.01 per cent over the Bank of England rate.

Unpredictable interest rates has prompted the launch of the mortgage, and both the tracker and fixed deals come with a £999 application fee and are available for loans of up to 90 per cent of the property's value.

John Barker, head of mortgages at Co-operative Financial Services, said: "It is difficult to predict with any accuracy what will happen to interest rates over a two-year period, so customers will obviously have to make decisions based on their personal circumstances and their own attitude to risk and need for payment security.

"Customers who like to be certain of their monthly repayments will benefit from a fixed-rate product, whereas people who believe there may be further interest rate cuts on the horizon may be more inclined to opt for a tracker."

Both products are part of the Co-operative's "green" range of mortgages - it means the bank will make an annual donation to a global warming charity for the duration of the product.

The fixed-rate deal has an APR of 7.1 per cent while the tracker is subject to six per cent APR. Both include early repayment charges but come with free standard and basic valuation fees for remortgages.

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