Homeowners given 'skinny' rates warning

Homeowners should be aware of being caught out by fixed-rate mortgage products that run out on a set date instead of offering a standard two-year deal, mform.co.uk has advised.

The online mortgage company has said that some lenders are currently offering so-called two-year fixes that in fact run out in either September or August 2009, meaning that borrowers are in some cases being offered just a 21-month term.

This, mform suggests, could lead to some Britons either forgetting to remortgage in time or paying much more in administrative costs come the end of the deal.

"Borrowers might think that a fixed rate should be just that - fixed for however long they choose from when they take the deal out," said mform.co.uk marketing and business development director Francis Ghiloni.

"But increasingly lenders offer deals fixed to a specific time [...] lenders justify the skinny deals on the basis that it reduces pricing uncertainty for them However it only serves to increase confusion for consumers who want to compare which product is offering them the best value," Mr Ghiloni added.

The cost of fixed-rate deals fell in September as lenders offered more attractive deals, the Bank of England recently advised.

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