According to the society, the launch is aimed at customers looking for the security of knowing what their mortgage repayments will be each month.
Part of the offering involves a five-year fixed-rate residential remortgage at 1.86 per cent. This product comes with one free standard valuation, assisted legal fees, one free funds transfer fee, no application fee and a £999 product fee, which can be added to the loan.
The other part of the remortgage deal involves a five-year fixed rate-residential remortgage at 2.06 per cent. This product has one free standard valuation, assisted legal fees, one free funds transfer fee, no application fee and no product fee.
Both of Monmouthshire Building Society’s residential remortgage products are available throughout England and Wales with a maximum LTV of 65 per cent.
Advisers have previously told Financial Adviser that owing to the benign interest rate environment borrowers have been attracted by the lower rates on offer for short-term fixed-rate deals.
However, five-year fixed rates have been growing in popularity as the margins between five-year fixes and short-term deals have narrowed and the likelihood of future rate rises has grown.
The FCA said that changes ushered in by the Mortgage Market Review (MMR) in April 2014 have made borrowers more likely to take out two-year fixed-rate deals.
As part of research the regulator carried for its Mortgage Market Study, the FCA found that customers who spoke to an intermediary increased their likelihood of opting for a two-year fixed-rate home loan by 14 percentage points and decreased the likelihood of choosing a five-year fixed rate deal by 8 percentage points.
The FCA also found that since the review, the proportion of fixed-rate mortgages being recommended by brokers has increased from 88 per cent to 94 per cent. Meanwhile, 57 per cent of mortgages arranged by a broker are two-year fixes, compared to 48 per cent before MMR.
The research also found that advice tended to lead consumers to buy mortgages with longer terms, with the average mortgage term since MMR up by 20 months compared to before the regime was introduced.
The paper speculated that since longer mortgage contracts mean lower monthly payments, this may be driven by intermediaries' cautious interpretation of affordability requirements.
Provider view:
Colin Strong, head of broker sales at Monmouthshire Building Society, said: “We recently expanded our core lending area for residential mortgage loans up to 95 per cent LTV across England and Wales, including our buy-to-let (BTL) mortgage range up to 75 per cent LTV.
“We hope the expansion will have a positive impact on the number of products available to IFA’s clients. This change will enable the society to continue its commitment to helping first-time buyers across England and Wales achieve their goal of getting on the property ladder.”
Fees/charges:
Either a £999 product fee or no product fee depending on the product chosen.
Adviser view:
Daniel Bailey, mortgage adviser at Middleton Finance, said: “The fee of £999 probably makes it one of the leading rates in the market for five-year fixed. Both rates are very competitive.
“I have clients who are going for two-year fixed because, by and large, they are cheaper than five-year fixed, but on the flip side, I also have clients thinking now is a good time to lock in a five-year period.
“I would think the Monmouthshire five-year fixed rates are very competitive and many applicants are applying for these. It looks like it is part of the market that Monmouthshire want to be in.”
Verdict:
As competitive as the rates are, borrowers need to weigh up is which of the two deals may be the most cost-effective given the customer's circumstances and a broker can help with that. Is it worth paying the fee or going for slightly higher rates and not paying the fee?
