TSB Intermediary has launched what it claims is the most competitive 10-year fixed rate mortgage on the market.
The bank’s new deal is priced at 2.89 per cent for homeowners up to 60 per cent loan-to-value.
Earlier this month, TSB waived account fees on its fee-free 10-year remortgage product.
Other recent changes include rate reductions for homeowners with larger deposits, as well as its three-year stepped fixed rate for homemovers, which will no longer be available from today (12 February).
Moneyfacts’ press officer Charlotte Nelson commented that with rumours circling about a base rate rise in the near-future, borrowers are starting to look for extra security from their mortgage deal; something a 10-year fixed rate mortgage certainly supplies.
She said: “TSB’s rate is highly competitive and heads straight to the top as joint market leader. However, despite this market leading rate, the deal is accompanied by a high fee of £1,260.”
She pointed out First Direct also offers a 10-year fixed rate priced at 2.89 per cent for borrowers with a 40 per cent deposit and this deal has no arrangement fee to pay.
“However, borrowers will need to open a current account alongside the mortgage to access this deal.”
TSB’s 10-year rate cut follows Newcastle Building Society launching a 10-year mortgage deal with a fixed rate of 3.29 per cent up to a maximum LTV of 80 per cent, with no reservation or completion fees, at the end of January.
Ms Nelson noted most 10-year mortgages require borrowers to be tied to the deal for the full term, so it is vital that they weigh up whether they will need extra flexibility, such as being able to transfer the mortgage to another home.
“There is clearly a demand for longer-term fixed rate mortgages, and with 10-year fixed rates cheaper than ever before, borrowers will have to weigh up the odds and assess whether the gamble will pay off,” she added.
Daniel Bailey, mortgage broker at Middleton Finance in Derbyshire, said 10-year fixed rates are very much a niche area and so he has not seen a great demand for them.
“However, to be able to fix for 10 years below 3 per cent is a fantastic rate.
“I can see the appeal if you only have 10 years left on your mortgage to secure a fixed rate for the rest of your term. It will be interesting to see if the demand for 10 year fixed deals increases this year.”
peter.walker@ft.com
