Unfair Fixed Rates Wednesday, 25th February 2009

Increasing interest rates on fixed rate deals are being imposed by lenders on borrowers who cannot put down big deposits.

Cheaper deals have been only for homebuyers who can afford to put down hefty deposits, although many banks and building societies have cut fixed rate deals in the past week, . Everyone else will see fixed rates go up instead.

Alliance & Leicester for instance has dropped its cheapest two-year fixed rate deal to 3.49%.

You then get a massive 2% fee of the amount borrowed. Repayments on a typical £150,000 loan over 25 years would be £750. And the total cost of two years £21,000.

If you are willing to pay out a 1% arrangement fee, the rate has fallen to 3.99%. Repayments are £791 a month and total cost £20,484. Both require a 25% deposit.

However, and here's the rub, if you can only put down a 15% deposit, you'll actually see the three-year fixed rate go up - to 5.99%, although the fee has dropped from 2% to 1%. Repayments are £966 and total cost £36,276.



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