First Direct’s New 5 Year Fixed Mortgage Deal.

by Mark Johnston

First Direct’s New 5 Year Fixed Mortgage Deal.

It seems that at the moment when it comes to mortgages five is the new two. Five year fixed deals are now enjoying a surge in popularity as many home buyers are now opting to lock in to some of the lowest rates ever seen in the UK.

Recent figures from mortgage broker firm, John Charcol, have shown that in September 2012 30 per cent of all its customers chose a five year fixed deal.

Another mortgage broker firm, London and Country, also added that “numbers fluctuate but the kind of volume we are seeing is about double that of last year”.

Therefore over the last few months it appears that borrowers appetites have increased for longer fixed rate mortgage deals.

This is maybe due in part to the Funding for Lending Scheme, through this scheme many mortgage rates have fallen rapidly in recent months and it may seem that these rates can go no lower.

However, First Direct, the online lender owned by the HSBC, have entered back in to the market with the lowest ever five year fixed rate mortgage.

Not only is this particular deal the lowest of its kind that this lender has ever offered, it is also the cheapest currently on record.

Many best buy tables show it to be the lowest five year fixed rate currently on offer.

First Direct has launched a five year fixed rate at an incredible 2.69 per cent for those borrowers with a 35 per cent deposit, not 40 per cent as is typical of almost all the best deals.

Rachel Springall at moneyfacts, the data firm, said “the new 5 year fixed deal launched by First Direct has a market leading rate”.

Andy Forbes, head of retail products at First Direct, stated that “ in response to current demand we have reviewed our offers available”.

Although some experts have warned that while the cost of new fixed rate mortgages is falling which is good news for borrowers, this fall is often been offset by a rise in the cost of fees.

It appears then that First Direct, the direct only lender, is no stranger to this as this low fixed rate deal comes with a hefty £1,999 booking fee, which can of course be added to the loan.

But it is also worth noting that fees at the moment can be as high as this for a two year fixed deal.

Mortgage experts have also warned that despite the rock bottom interest rate if borrowers are unsure of their plans for at least the next five years or if they require a level of flexibility, then this particular deal may not be the best deal for them.

In conclusion, it seems that in the current climate five year fixed rate mortgages continue to be the product of choice for those comfortable with being tied in to their mortgage loan for a longer period.



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