MortgagesNov 26 2015

TSB woos homebuyers with 10-year fixed mortgages

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TSB has refreshed its range of 10-year fixed rate mortgages at up to 75 per cent LTV and unveiled cuts across residential loans.

The lender has launched a 10-year deal for those moving home and first-time buyers at up to 60 per cent loan-to-value, priced at 3.04 per cent with a £995 product fee or 3.14 per cent with no fee.

Ten-year fixes up to 75 per cent LTV are available at 3.19 per cent with a £995 product fee, or 3.29 per cent fee free.

The rate applicable for remortgage customers is 3.09 per cent up to 60 per cent LTV and 3.24 per cent up to 75 per cent – both with a £995 product fee.

The fee-free options come with a rate of 3.19 per cent and 3.34 per cent up to 60 per cent and 75 per cent respectively.

In addition, the lender has made cuts to rates on several mortgages for homemovers and remortgagers.

This includes a five-year fix at up to 75 per cent LTV, which has been reduced from 2.75 per cent to 2.49 per cent with a £995 product fee, while the fee-free option comes with a discounted rate of 2.69 per cent.

Reductions up to 0.15 percentage points are also available for homeowners looking for two-year fixed and tracker mortgages with a LTV of up to 75 per cent, while loans up to 85 per cent LTV have been reduced by up to 0.20 of a percentage point.

Provider view

Roland McCormack, TSB mortgages intermediary director, said: “TSB’s new 10-year mortgage offers stability and security for homeowners across Britain, with a fantastic rate to match. For people looking for more flexibility and a shorter term, the reductions across TSB’s two, three and five-year mortgages will help them feel the difference in their wallets.”

Adviser view

Commenting on the 10-year fix at 60 per cent LTV, Georgina Partridge, founding partner and head of marketing at London-based Plutus Wealth Management, said: “On the face of it, the deal does seem competitive. It could be useful for those with a low risk profile and those eager to plan for the long term. They would be able to know what their fixed payments are going to be and plan accordingly. Those who fix for a shorter period of time have access to a better rate of interest at this moment in time, but it is unlikely that interest rates will stay low.

“The trouble when it comes to assessing the suitability of the product is that nobody knows what interest rates are going to be over the next 10 years. People are afraid to fix for that long and want to have the flexibility.”

Charges

Ranges from £0 to £995

Verdict

No matter how much they are dressed up, 10-year mortgages are a gamble. No one knows what base rates are going to be over the next decade, therefore it is nigh on impossible to predict whether these products represent good value over the long run.

Having a fixed rate of repayment might appeal to those who are into the last 10 years of their mortgage deals. These individuals would be able to rest assured, knowing that their mortgage will be affordable for the duration of the fixed deal.