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Money: So how are you fixed for a mortgage?

MONEY TALK

Steve Lodge Personal Finance Editor
Saturday 11 October 1997 18:02 EDT
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Are mortgage rates going up? Yes and no. Headline rates have already risen by one percentage point or more this year to close to 8.5 per cent, reflecting increases in the base rate, and there's probably another 0.5 points or more to come. These hikes are hitting discounted mortgages as well as standard-rate ones. But new fixed-rate mortgages are at their cheapest for a long time, with a whole range of lenders offering five- year fixes at below 7 per cent.

To the layman this might seem a bit odd - common sense says borrowers should be charged more, not less, for the certainties of a fixed-rate deal. Underlying this admittedly unusual situation is the prospect of European monetary union, which has resulted in a marked recent fall in longer-term UK interest rates. On the downside, and for much the same reason, people coming up to retirement will find that many pension plans will buy much lower pensions than previously, and many of the best fixed- rate savings deals are being withdrawn.

For a free copy of the Independent on Sunday's "Guide to Mortgages", sponsored by Barclays Mortgages, fill in the coupon (right) or call 0800 585691.

This week it was an Australian insurer, AMP, giving a reminder of just how much money might still be forthcoming from windfalls. The Aussie insurer is giving those eligible - which include 200,000 AMP and London Life policyholders - free shares worth an average of pounds 3,000, double previous estimates. Some policyholders can expect shares worth pounds 8,000. Qualifying policyholders should receive details any day now of the vote to join the stock market. If all goes to plan, the shares will be handed out next summer.

Nor may this be the last of the good news from down under for carpetbaggers. This year AMP has already tried to take over one of Britain's dwindling band of mutual insurers, Scottish Amicable. The Aussies lost out to the men from the Pru, but are still looking at expanding over here, and it is not hard to see AMP buying either a building society for the high- street presence or another insurer. Potential targets include the usual suspects - probably the bigger rather than smaller societies, such as Nationwide and any number of insurers, including Scottish Provident and NPI. Britannia building society, which also has its own established insurer, Britannia Life, might satisfy both ambitions.

Meantime, I have yet to hear a whisper from a single "no windfalls" building society boss after my challenge last week to pledge themselves to resign if they ever sold out. I even put the challenge direct to Nationwide, the biggest remaining society, which claims it is hatching new plans to prove the benefits of mutuality. But I understand my challenge is in the in-tray of chief exec Brian Davis...

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