Charcol has launched a 1.55% discounted mortgage to January 31 2007.
The product has a current pay rate of 4.24%, capped at 5.99%.
Ray Boulger, senior technical manager at Charcol, says: “Most fixed rate mortgages now look expensive when compared to discount and tracker deals. Capped rates are beginning to offer better value, although good deals are still few and far between.
“This product offers a level of repayment security for those borrowers who would prefer it, by trading off part of the discount for a cap. It will appeal to borrowers whose basic preference is for a discount, but are still nervous about interest rates. Penalties apply during the discounted and capped period only and after this borrowers should review their options.”