Don't miss out on the best mortgage deals

As the temperature drops, the mortgage market has started hotting up, with lots of new best buys launched in the past few days.

As thoughts turn to Halloween, Bonfire Night and, dare I say it, Christmas, there is the usual October chill in the air. But not in the mortgage market, which is warming up after a dreary summer, as lenders announce product changes on a near daily basis.

In the first week of the month for example a raft of lenders cut their rates, cut their fees, and launched new products designed to attract borrowers. Whether they are responding to their own costs falling, staging a last push to meet year-end targets or simply following the winds of economic change is anyone's guess as discussed last week in The top 20 mortgage deals.

In the last week the new deals have kept coming, but with so many mortgages being launched each week it's hard to keep up with the best buys. So here's a rundown of what's hot this week, what's not, and an updated best buy mortgage table.

Hot off the press

The best new products launched last week were First Direct's two fee-free offset trackers, said by financial information provider Moneyfacts to be 'the best of their type in the market'. And I have to agree they are pretty tasty.

What's so good about them?

• The rates are low with the 60% loan-to-value product (for those with 40% upfront) coming in at just 2.99% and the 75% deal just 3.44%.
• There is no fee! That's £0 arrangement fee. Zip, nada, nothing. But it gets better. No booking fee, and no valuation fees. These are truly fee-free mortgages.
• They are also free to leave. Not only are there no early repayment charges, meaning you are not tied into the deal, there is also no exit charge, something that comes as standard on most mortgages.
• Offset benefits. You can link the money you have in credit with the lender to your mortgage and 'effectively overpay' your savings pot into your homeloan. This could save you oodles of interest and years off your term, as explained in my recent article Homeowners: Maximise your savings.

What's not so good?

• These products are only available to borrowers moving to First Direct from a competitor. In others words first-time buyers cannot get the deals, and neither can existing First Direct borrowers.
• Because the mortgages are tracker deals your payrate could, and will, increase in line with the Base Rate. Nobody knows when it will rise but there is no cap on how high it could go.
• Large loan borrowers could do better. For example the 75% mortgage at 3.44% (fee-free) is a great deal but First Direct also has a deal at 3.14% with a fee of £699. You're likely to be better off paying the fee to get the lower rate, particularly on a large mortgage.

Rates cut by the Rock

Last Friday state-owned lender Northern Rock announced cuts to its mortgage rates -- the second round this month!

It has reduced some of its fixed rates by up to 0.40% and tracker rates by up to 0.14%. And to help cash-strapped homebuyers the lenders has also reduced some of its fees to just £595. But which deals stand out?

The two-year fix at 3.69% with a £595 fee is tempting for borrowers who can pull together a 30% deposit. But it is only open to purchasers -- remortgagors face a higher rate and fee.

Another purchase-only deal is the lender's two-year tracker at an excellent rate of 2.69%, again with the modest £595 fee and open to those with 30% upfront.

Mutual benefits

The world's largest mutual, Nationwide, has also been cutting rates for the second time this month, launching a new raft of mortgages aimed exclusively at purchasers (movers and first-time buyers).

Rates have been cut by as much as 0.84% plus first-time buyers can now choose between a £500 discount from the reservation fee on selected deals, or a £250 discount on the fee plus free legal fees.

Is the market becoming more competitive?

There have certainly been more rate reductions in October than we have seen during the summer, which is very welcome. One trend in the last week has been lenders offering better deals to homebuyers rather than remortgagors (bar the First Direct deals). So we are starting to see some competitive mortgages that are purchase-only.

The second theme of the week is reduced fees, and lenders are going to great pains to emphasise how they are making it easier for borrowers to buy a property by minimising the upfront costs. This is good news and I reckon that average fees will drop significantly in the last quarter of the year. Let's hope so.

Alas, the best deals are still targeted to those with a big deposit -- although I've noticed an increase in the 70% LTV tier on some of the keener rates. It's a step forward from the 60% maximum, but of course a 30% deposit is still a huge amount of money for many to find.

Below are my favourite deals for purchasers at the time of writing - but watch this space for news of new offerings as it's a fast-moving mortgage market this month:

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