Things are all going a bit fee-free lately.

Several lenders are taking the initiative to cut down or remove product fees as cash-strapped borrowers plan their next moves in the mortgage market.  And some of these deals are starting to look a bit more worthwhile compared to their fee-paying alternatives.

Take Alliance & Leicester's four year fixed rate mortgage for example. If you opt for the 'standard' version, you get 5.09% but pay £995 up front.  However, forego the fee and you get 5.59% fixed.  Now, that's only a 0.5% premium which isn't catastrophically higher.  The difference on a £100,000 mortgage is around £50 a month.  So it's clear that the fee option is still better value overall; the payoff is within 18 months,  Nevertheless, if you don't have the cash, this is more attractive than many deals with a less modest no-fee interest premium.

Britannia has a similar margin on its fee-free fixed rate mortgages: five years at 5.59%, ten years at 5.69%, both set no more than 0.5% above the rates it offers for applicants paying £999 fees.  Northern Rock's margin on a no-fee mortgage also comes in below 0.5% on most loan-to-value scenarios.

The problem with most of these fee-free deals, though, is that they're not available with low deposits.  So it's clear they are being offered to tempt remortgagers rather than first time purchasers.

Also, why are these options only available on fixed rate mortgages?  This is at a time when tracker mortgages are surging in popularity and fixed rates are pegged a long way over base.  HSBC is one of the few exceptions. A first time buyer with a 25% deposit can get an HSBC fee-free tracker at 3.29% over the Bank of England base rate for the life of the loan.  Tie-ins?  None.  Still, though, if you'd pay £799 in fees, you'd get base rate plus 2.45%.  So that's a less favourable 0.84% premium.  Moral of the story: despite these fairly promising moves, if you want a good overall deal, get a fee!

Woolwich is keeping up its rivalry with HSBC by offering a new fee-free tracker at 3.19% (2.69% over the base rate).

Parent company Barclays is keen to take on its fellow High Street giant, whose First Direct and HSBC-branded tracker mortgages have been topping many "best buy" tables for much of the year.

The new tracker mortgage, although 0.4% more expensive than its lowest-rate tracker at 2.79%, has an advantage that will appeal to many cash-pressed remortgagers and buyers: it costs nothing to apply.  

Compare that to the £999 fee for Woolwich's cheapest deal and the £1,199 for the HSBC 1.99% tracker and you can see why, in the short term at least, this deal has enough appeal.

And for a tracker with nearly a three per cent premium over base, yes, we'd be thinking short-term. 

Andy Gray, Woolwich head of mortgages, points out that tracker mortgages are attracting strong interest due to "the combination of rock-bottom, stable base rates and an increasingly competitive market".

Competitive it is, but so far it's mostly been a direct battle between Barclays (Woolwich) and HSBC.  We'll wait to see who else enters the fray! 

Buyers, not remortgagers, will benefit from HSBC's increased lending quota

HSBC has responded to growing demand from first-time buyers, announcing an increase in the amount of money it is earmarking for purchase loans at the 90% loan to value limit.

The bank's £500 million increase in allocated lending should enable around 3,650 additional house purchases between now and the New Year (based on an average first-time purchase price of £150,289).

HSBC Head of Mortgages, Martijn van der Heijden, comments that many buyers who put off purchasing last year are now heading back to the housing market as they have seen reports of prices bottoming out.

If you want a fixed-rate 90 per cent mortgage, HSBC's rates work out as follows:

• 5.99 per cent fixed for 2 years
• 6.49 per cent fixed for 5 years
• Both these deals cost £599 in fees.

Competing deals are available from NatWest (5 years at 5.99 per cent, with no fees) and Yorkshire Bank (2 years at 5.99 per cent, with a £999 fee).

HSBC is also offering 90 per cent LTV mortgages with tracker interest rates. You can opt for a 2-year discounted tracker (3.89%, booking fee £1199) or a lifetime tracker (4.09 per cent, booking fee £999).

The surprise is that competition for lending at this level is still so low.  However, with the cost of inter-bank lending having dropped from its credit-crunch high to a historically low rate, we might see more lenders boarding the 90% LTV bandwagon.