Skipton U-turns on seven-year fixes

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Skipton U-turns on seven-year fixes

Skipton has re-launched its range of seven-year fixed rates and cut borrowing costs on its five-year fixes, despite saying in the summer it had no plans to target those looking to lock-in rates for longer. 

The lender is offering a seven-year product at 2.40 per cent to 75 per cent loan-to-value (LTV) with a £995 fee, and a 2.65 per cent rate to 85 per cent LTV with no fee.

Available for purchase and remortgage, the products come with free valuations and standard legals.

The move is a significant u-turn from Skipton: in June, the lender told FTAdviser it had no plans to offer seven-year fixes to cater for increasingly cautious clients.

However since then, in November, the Bank of England has raised rates from 0.25 per cent to 0.5 per cent, and indicated further rate rises will occur in the mid to near term.

Coventry Building Society and the Post Office are the only other lenders currently offering seven-year deals.

Meanwhile, cuts of up to 0.1 percentage points on Skipton’s five-year purchase range at 85 per cent LTV mean rates now start at 2.14 per cent with a £1,995 fee.

Skipton has also launched new-build purchase-only products, including a three-year fix at 2.49 per cent to 90 per cent LTV with a £995 fee and a fee-free three-year tracker at 2.35 per cent to 90 per cent LTV.

All new build products include free upfront valuations.

Landlords will benefit from a revamped buy-to-let range, which includes a three-year fix at 2.64 per cent to 70 per cent LTV with a £495 fee, a fee-free three-year 2.92 per cent fix to 75 per cent LTV, and a three-year tracker at 2.55 per cent to 75 per cent LTV.

The buy-to-let deals are available for purchase and remortgage, with free valuations and standard legals on remortgages.

Kris Brewster, the Society’s head of products, said: “Although bank base rates remain low, uncertainty remains high, so we are delighted to introduce these seven-year fixed rate mortgages which are likely to appeal to borrowers who prioritise stability and prefer to have certainty over their mortgage payments for a longer period.

“With the possibility of future base rate increases, more people may prefer locking themselves into longer fixed-rate deals to insulate themselves from potential interest rate rises.”

Ray Boulger, senior technical manager at London-based John Charcol, said seven year fixes had never been very popular because they tended to be priced significantly higher than five-year fixes but not much lower than ten-year fixes.

He said: “If it is too much higher than five years, then the question is ‘why is it worth paying that extra for the first five years in order to get two more years’?

“It is good to have a choice of seven years – there is no logical reason why it is five and ten and nothing in between. It makes sense, but lenders seem to struggle to get the pricing attractive enough.”

Mr Boulger pointed out that Coventry had seven-year deals available at 2.29 per cent to 75 per cent LTV and 2.45 per cent to 85 per cent LTV.

“Coventry’s rates represent the right balance,” he said.

Mr Boulger added that lenders can be more flexible on stress testing at terms longer than five years, and that might be a way in which they can make seven-year deals more attractive.

simon.allin@ft.com