Yorkshire reduces fixed rate mortgage

Yorkshire Building Society has announced a new fixed rate mortgage reduction to aid home-movers cover the cost of the increase in stamp duty. The new mortgage deal offers a 3.89% fixed rate for two years with a 1% cashback on mortgages up to £250,000. An offset version is also available at 3.99% fixed for two years, also with a 1% cashback.

Yorkshire Building Society made the announcement as the current stamp duty holiday being enjoyed by home-movers buying properties valued between £125,000 and £175,000 will expire on January 1, 2010.

After January 1 next year, property buyers will be slapped with a 1% tax bill, which is levied on properties bought up to the value of £250,000.

Iain Cornish, chief executive of Yorkshire Building Society said “In the current economic environment it is disappointing that the Chancellor hasn’t extended the stamp duty holiday for home-movers buying properties up to £175,000. We understand how difficult it is for people to find extra cash to fund the cost of moving home and have therefore designed this mortgage to help with these costs.

“Our average loan size is under £175,000 and almost 90% of all the mortgages we do are under £250,000. This mortgage will therefore benefit almost all our borrowers who are looking to move home in the coming months and help with the stamp duty tax bill which could be up to £2,500.”

The company said the new mortgage rates would be available starting today (December 17) for house purchases, on mortgages up to £250,000, and require a 25% deposit.

Meanwhile, the December Buildings Societies Association Property Tracker Survey has revealed that property prices would rise 3.0% next year.

The December forecast compares to a 1.6% rise in prices in September and an 8.6% decrease forecast in December last year which demonstrates confidence is slowly returning to the property market.

Paul Broadhead, head of mortgage policy at the BSA said, “The recent stabilisation of house prices over the latter part of the year is clearly reducing pessimism in the housing market. However, a healthy housing market is heavily dependent on stability in the labour market. And with unemployment likely to rise further in 2010 price growth will be moderate at best in 2010.”