TSB has unveiled a host of fee-free three-year fixes for home movers while scrapping the mortgage application levy from all products for both residential and buy-to-let mortgages.
At up to 60 per cent, 75 per cent, 80 per cent, 85 per cent, 90 per cent and 95 per cent LTV, a 36-month fix is now available with rates of 1.84 per cent, 1.99 per cent, 2.14 per cent, 2.29 per cent and 2.89 per cent respectively.
The mortgage application fee, which used to cost £265, does not apply to the three-year fixes.
TSB’s lowest rate three-year fix is 1.49 per cent to up to 60 per cent LTV with a £995 product fee. The lender’s range of two-year fixes remains unchanged – bar the removal of the mortgage application level.
Last month, the lender announced the reduction of rates across a range of fixed and tracker-rate mortgages for home movers, remortgagers and landlords, as well as increasing the maximum loan available on selected mortgages to £1m.
The biggest rate cut of 0.41 percentage point was applied to three-year fixes for homeowners with a low deposit of between 5 per cent and 10 per cent. The loan is currently available at 3.58 per cent with a £995 product fee.
Provider view
Roland McCormack, mortgage intermediary director at TSB, said: “The removal of the mortgage application fee on all our products and the introduction of new product fee-free fixed rate mortgages is good news for borrowers. The changes we’ve made will help homeowners borrow well across the property ladder.”
Adviser view
David Hollingworth, associate director at Bath-based London & Country Mortgages, said: “We seem to get the occasional flurry of three-year fixes, but with two and five-year fixes being so popular at this time, lenders are likely to struggle in shifting these products. However, there are people who want to fix for a medium term, but not five years, so there is bound to be a demand for three-year loans – so long as they are competitively priced.
“Who knows where interest rates will be in three years' time. At one stage, the industry predicted that rates would rise, but they did the exact opposite. It does not seem that rates will move in the short term, but that might change amid uncertainty from Brexit.”
He added: “I am brokering more fixed rate deals – specifically two and five-year fixes. A lot of people go for the two-year with a view to switch at some point in the future.”
Charges
The aforementioned deals are free from product and mortgage application levies.
Verdict
There has been a noticeable promotion of three-year fixes recently. There is likely to be a healthy demand for such products from people who want to protect against the prospect of a hike in base rates, but only if the price is right. There is a 0.1 percentage point difference between TSB’s two-year fix to 60 per cent LTV with no product fee and the equivalent three-year fix. It is therefore conceivable that borrowers would opt for the latter for the security of an extra year fix. However, five-year fixes are looking increasingly appealing as they continue to claw at the narrowing price gap between two-year fixes.
