Accord Mortgages has launched a new range of five-year fixed rate residential loans for borrowers with a 25 per cent deposit or less.
At 75 per cent loan-to-value (LTV), mortgages fixed over a five-year period are priced at 2.49 per cent. The rate is 2.59 per cent and 2.89 per cent at 80 per cent and 85 per cent LTV, respectively.
For borrowers with a 10 per cent deposit, the rate applicable is 3.39 per cent.
The new mortgages from the intermediary-only lender, which is part of Yorkshire Building Society Group, all have an £845 fee.
In addition, borrowers looking to buy a home with a 5 per cent deposit can get a 4.49 per cent five-year fixed rate mortgage, with no product fee and £750 cashback on completion and free standard valuation.
First-time buyers will get an additional £500 cashback on completion, bringing the total cashback to £1,250.
The range is available with the incentives of £250 cashback on completion and free standard valuation for house purchases, or free standard valuation and legal fees for remortgages.
Provider view
David Robinson, national intermediary sales manager at Accord Mortgages, said: “We are always looking at ways to offer borrowers value for money. We believe these mortgages will prove very attractive to those customers who are looking for a competitive rate with the security of knowing what the exact repayments will be for the next five years.
“We believe these changes provide borrowers with a wide range of competitive options, and will prove to be extremely popular with brokers.”
Adviser view
Commenting on the five-year fix at 75 per cent LTV, Kevin Dunn, mortgage adviser at Leicestershire-based Furnley House, said: “It sounds like a good deal – it is in line with similar deals offered by competitors. I would say five-year deals are best suited to borrowers who are settled in their property.
“The product may not necessarily be the best for first-time buyers. A lot can happen over the space of a few years. The first-time buyer might want to sell their property after a few years because of a host of factors – because a baby is on the way so there is now a need to move into a bigger property for example.”
Mr Dunn added: “I think that the mortgage price war is still ongoing. Lenders are making their products even more attractive to try to entice borrowers who want to buy their second home ahead of the stamp duty changes.”
Charges
Ranges from fee free to £845.
Verdict
The number of lenders that have discounted their five-year fixed-rate offerings suggests that the demand for these products is on an upward trend. This is unsurprising, given the uncertainty over a base rate hike – intensified by a heightened volatility in global equity markets.
Five-year products are likely to appeal to borrowers who are looking to settle into a property for a relatively long period of time. Fixed-rate loans are likely to give borrowers the ‘peace of mind’ factor because they would know that their monthly repayments will remain constant during the fixed rate period, even in the event of a rise in base rates.
The industry is likely to see the emergence of even more competitive deals to entice borrowers in the lead up to the changes to stamp duty.
