A cheap fixed-rate vanishes everyday By Neil Simpson; They're going fast, so act quickly to avoid missing out on the best deals ever.

Byline: NEIL SIMPSON

The race is on to take advantage of some of the lowest fixedrate mortgages ever.

Experts say the best deals are being withdrawn on a daily basis as lenders realise they are too generous. So borrowers who get their application forms in before the shutters come down could end up with the best mortgages of the year.

'These are confusing times because, while variable mortgage rates are falling, the cost of most fixes is rising,' says David Hollingworth, of Bath-based broker London & Country. 'But the good fixes are still so cheap that they are worth trying for and it looks as if there won't be any better fixes around soon.' Rock-bottom rates mean fixedrate mortgages have rarely been so popular. A year ago, less than one in four borrowers picked a fix.

Today the Council of Mortgage Lenders says half of all loans are fixes.

Here is our guide to the fixedrate mortgage market.

WHY PICK A FIX?

Because fixed-rate mortgages have always offered borrowers certainty. You know your payments will stay the same for the set period. That makes them popular with cautious buyers, firsttime borrowers and those who are stretching their finances to get on the housing ladder.

The price borrowers used to pay for this certainty was a slight premium.

Fixes used to be more expensive than standard variable or discount deals.

But today's fixes are often as low or lower than other rates. So borrowers get the traditional certainty at a fantastic price. It's not a trend that's expected to last, which is why some experts say borrowers should snap up good fixes while they are still available.

WHY ARE FIXED-RATE DEALS GETTING MORE EXPENSIVE?

The Bank of England cut its base rate by 0.25 per cent to 3.5 per cent in July and most lenders cut their variable interest rates this month, so you would have thought fixes would also be getting cheaper.

But lenders work out the rates on fixes by looking ahead and trying to work out where interest rates will go in the next two, five or ten years, then set their rates accordingly. Today, lenders predict slightly higher rates in the future - so their fixes are going up to match them.

IS IT TOO LATE TO FIX?

Not at all. Once your application form is with a lender - or once your phone or Internet application has begun - then you should qualify for the deal you selected, even if it subsequently gets withdrawn for new applicants. So even if you miss the deadline, replacement fixes can still be good value.

If you have a [pounds sterling]100,000 repayment mortgage and miss out on Chelsea's 3.29 per cent two-year deal and take out a 3.69 per cent alternative from Staffordshire building society then at [pounds sterling]516 your monthly payments are just [pounds sterling]22 higher. And you are still locking your payments at very close to the Bank of England's base rate.

Today's fixes are also more flexible than before. Deals from Nationwide let you make capital overpayments of up to [pounds sterling]500 a month, while Abbey National, Halifax, Cheltenham & Gloucester and Woolwich let you repay up to ten per cent of the loan each year without penalty.

NOT READY TO REMORTGAGE?

David Bitner, head of Bradford & Bingley's mortgage-broking arm The MarketPlace, says borrowers tied to their existing deals until later this year by big redemption penalties can still try locking into today's low fixes.

'If the lender pays your valuation and legal fees you can effectively apply for one of today's low fixes for free,' he says. 'It will normally take a month to get the offer through, then you should get three months to accept it and complete. If better deals come up, you can walk away without having lost anything.

'If not, you can remortgage as soon as redemption penalties on your existing deal expire. By that time, fixes for new applicants may cost more, so you will be glad you acted when you did.'

THE PICK OF THE FIXES

The fixed-rate mortgage market has rarely been more volatile.

But, at the time of printing, broker London & Country reckoned that these were some of the best deals available.

. Two-year fixes: Chelsea building society has a two-year fix at 3.29 per cent, while Staffordshire building society offers one at 3.69 per cent.

Both are available to house movers and first-time buyers as well as remortgage customers.

. Three-year fixes: Again Chelsea building society is worth contacting. It has the best rate, set at 3.69 per cent, while Kent Reliance building society has a similar deal set at 3.88 per cent. Both loans are available to house movers and remortgage customers, and both are available to people borrowing up to 95 per cent of their home's value.

. Five-year fixes: Once again, two building societies top the charts.

Scarborough's deal set at 3.89 per cent and Nottingham's at 4.08 per cent are best buys, according to London & Country.

. Longer-term fixes: Borrowers who want financial security for even longer can look at Leeds & Holbeck's deal where payments are set at 4.59 per cent until the end of September 2013.

But be warned, there are big penalties if you want to leave the deal early.

BARGAIN BUY FOR ANDREW

BUILDING surveyor Andrew Moulsdale decided to lock into low interest rates in the spring after spending two years on a variable-rate loan.

'My original loan worked well because I got a cash payment when I took it out which paid for new furniture and some building work,' says Andrew, who lives in Blackheath, South-East London.

'Payments went down every time interest rates fell, but I thought it couldn't go on forever and I wanted to fix my payments before rates started going up again.' Andrew, 38, asked Russell Brown at The Investment Company in Battersea, South London, for help.

He picked a low-rate fix - 3.59 per cent - from Northern Rock and reckons it will look an even better choice if rival deals continue to edge upwards.