First Direct Launches Cheapest 5 Year Fixed Deal.

by Mark Johnston

First Direct Launches Cheapest 5 Year Fixed Deal.

Mortgage rates have been tumbling in recent months as the impact of the government’s funding for lending scheme becomes more and more apparent.

It seems then that there is yet more evidence of easing within the mortgage market, Chelsea building society, Yorkshire building society and First Direct have all announced new products.

Chelsea building society has cut the rate of its 2 year fixed rate mortgage for those with a 25 per cent deposit.

Sunjeer Sahota, product manager at Chelsea building society, stated “we keep our product range under constant review to ensure our mortgages are always competitive across all loan to value tiers”.

Yorkshire building society has also recently launched  a 5 year fix at 2.64 per cent, this however is only available to borrowers with a 40 per cent deposit and comes with an expensive fee of £1,475.

But First Direct, HSBC’s online and telephone bank, have also launched a market leading deal for those borrowers who want to fix their mortgage rate for 5 years. This deal comes with a rate of 2.64 per cent, but it only requires a 35 per cent deposit and a smaller fee of £1,399.

Repayments on this deal for a typical £150,000 25 year loan work out at around £684 a month. Those remortgaging to this deal will however get their legal fees paid.

The lender has also revealed a 2 year fixed rate repayment mortgage at 1.89 per cent with a £1,999 fee and a 3 year fix at 2.49 per cent which comes with a £1,499 fee.

It does seem though that these products are ‘limited edition’ but borrowers can expect them to be on offer for the next month or so.

Andy Forbes of First Direct, said “in response to demand we have lowered the rates on many of our 5 year fixed rates, to ensure our customers have access to our most competitive rates”.

Charlotte Nelson of Moneyfacts, the comparison website, added “First Direct has yet again launched market leading rates and both the 1.89 per cent 2 year fixed rate and the 2.64 per cent 5 year fixed rate do not disappoint; entering the market as the lowest deals on offer in their relevant sectors”.

Experts have warned however that borrowers still need to keep their wits about them when comparing mortgage deals as although rates have tumbled, upfront fees have risen.

Therefore although the First Direct deal looks like one of the cheapest fixes on the market, most home owners would be better off with a deal such as the one offered by Coventry building society.

Their deal is a 3 year fix with a slightly higher interest rate of 2.69 per cent but it comes with an upfront fee of just £999.

Also with Norwich and Peterborough building society, borrowers can lock into a competitive 2.74 per cent rate on a 5 year fix and only pay a mere £295 fee. This deal also comes with free legal work and valuation costs for those remortgaging or £200 cashback for buyers.



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