Yorkshire Building Society has become the latest lender to launch a 10-year fixed rate mortgage in response to uncertainty around interest rates post-Brexit.
Borrowers with a 25 per cent deposit or more can access a 2.89 per cent rate, which can be ported to another property should the borrower wish to move during the fixed rate period.
This makes it the lowest 10-year fixed rate available on the market at 75 per cent loan-to-value.
The mortgage, which has an £845 product fee, is available for either house purchase or remortgage.
Brendan Gilligan, mortgage product manager for the society, said the deal was developed in response to strong customer demand for a longer-term fix.
He said: “These requests follow uncertainty about the economy and interest rates after the UK voted to leave the European Union.”
Rachel Springall, spokeswoman for Moneyfacts, confirmed the product’s market leading status, but cautioned borrowers must always work out the true cost of any deal and be sure that their circumstances will remain relatively unchanged for the next decade, so they can avoid early repayment charges.
“In this low rate market buyers should ideally be aiming to overpay on their mortgage whenever possible, so that they can raise the equity in their home and reduce the term of the loan,” she said.
Earlier this month, several lenders reacted to the EU referendum by launching ‘lowest ever’ 10-year fixes.
HSBC’s was priced at 2.79 per cent for purchases and remortgages for up to 70 per cent loan-to-value, with no product fee, while Coventry Building Society reached the top of the best buy tables with a 2.39 per cent rate for deals at 50 per cent LTV, with a fee of £999.
Also that week, West Bromwich Building Society’s 10-year deal came in at 2.79 per cent for 65 per cent LTV, while Barclays priced theirs at 2.79 per cent at 60 per cent LTV, with a £999 fee.
Matthew Fleming-Duffy, brokers at Cherry Mortgage and Finance, said advisers should cautiously welcome these deals, as they will enable some clients to stabilise their monthly payments for a relatively long period of time, particularly if they feel anxious about possible future rate rises.
“However, caveat emptor, as 10 years is a long time and a lot can change with an individual’s personal circumstances and requirements,” he stated. “All of these products come with stiff penalties (particularly in the early years) if you wish to clear the mortgage, or the lender loses its lending appetite in years to come and a new lender is required.”
Separately, YBS has also launched a couple of two-year fixes aimed at helping first-time buyers get onto the housing ladder.
It is offering a two-year fix at 1.94 per cent mortgage for those with a 10 per cent deposit an a £1,345 product fee, for both purchase and remortgaging.
Then for those with a 5 per cent deposit, there’s a 3.48 per cent two-year deal with an £845 product fee for purchase only.
peter.walker@ft.com
