Coventry Building Society is set to launch the lowest ever 10-year fixed rate at 2.39 per cent for deals at 50 per cent loan-to-value.
Available from Friday (8 July), the product comes with a fee of £999, while a fee-free option priced at 2.69 per cent is also available.
The 10-year fix comes with early repayment charges for the term of the product.
Borrowers looking to redeem early will pay 5 per cent of the mortgage balance during the first two years, 3 per cent for the next three years and 1 per cent for the remaining term.
The society’s head of intermediaries Kevin Purvey explained the post-Brexit fall in swap rates means there is an opportunity to offer these rates to people looking for long-term security in these uncertain times.
“Today’s market is particularly fast-moving, however, so I’d encourage brokers to act now to secure this great deal for their clients,” he commented.
Moneyfacts spokeswoman Rachel Springall said decade-long fixed deals were a rarity after the credit cash, but right now there are more deals than ever, with lenders creating a price war.
“The number of deals has spiked over the last 12 months in particular, there were 14 options a year ago and now there are a staggering 130 options, back in 2011 there were only eight.
“This trend may well continue to grow in times of uncertainty, but borrowers must always work out the true cost of any deal and be sure that their circumstances will remain relatively unchanged for the next 10 years.”
She confirmed the lowest 10-year fixed rate currently available is Leeds Building Society’s 2.84 per cent deal at 65 per cent LTV, which comes with a fee of £1,499.
TSB also offers a 10-year fix, available up to 60 per cent LTV, priced slightly higher at 3.19 per cent, but with a fee of £265.
Meanwhile, adviser arm Coventry for Intermediaries will adjust its buy-to-let lending policy in advance of the changes to landlord tax relief, which take effect from April 2017.
Its rental calculation will be increased from 125 per cent to 140 per cent of the monthly mortgage interest payment and will be calculated using the reference rate or current product pay rate, whichever is higher.
Reference rates remain unchanged.
The reference rate is 5 per cent for applications of 65 per cent LTV and below, increasing to 5.5 per cent for applications up to 75 per cent LTV. Borrowers taking a five-year fixed rate will be assessed on a rate of 5 per cent.
The new calculation will be applied to all buy-to-let applications submitted from 8pm on 13 July.
Conor Murphy, director at brokers Capricorn Financial, said the rental coverage move is fairly consistent with other lenders and wider market trends.
“With base rate set to head down to 0 per cent, then you could argue 140 per cent coverage at 5 per cent or 5.5 per cent is excessive, but it is certainly cautious,” he stated.
“As a result of this approach, and the tight affordability criteria in the residential space, the overall lending market seems very safe and secure. I do think you will see more lenders start to ‘top-slice’ income and use that to top up rental shortfalls.”
peter.walker@ft.com
