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Mortgage rates hit new low but fees rising

Wednesday, 5 October 2011 2:40 PM

The average interest rate for a two-year fixed rate mortgage has hit a new record low, according to Moneysupermarket.com.

However, the price comparison website warned borrowers to check the product fees attached to mortgage deals as well as the interest rates.

Both trends were highlighted by Leeds Building Society's launch yesterday of a two-year fix with a rate of just 1.99 per cent – the lowest in its 136-year history.

However, the deal has a booking fee of £199 and completion fee of £1,800 on mortgages of up to £500,000 and 1 per cent above that.

Kim Rebecchi, Leeds Building Society's sales and marketing director said: "This is an outstanding offer that allows customers to guarantee low payments for two years and benefit from the peace of mind this delivers."

Moneysupermarket.com said the average rate for a two-year fix in the market as a whole was down from 4.01 per cent in August to 3.82 per cent now. However, fees for fixed rate deals have increased by 6.4 per cent in 2011.

Clare Francis, mortgage spokesperson for the website, said it was vital to work out the total amount you will repay over the term of the offer.

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