by Mark Johnston
New 10 Year Mortgage Launched!
It seems that the numbers of people taking out new loans fell heavily when banks were hit by the credit squeeze in 2008. Before that, it had been normal for borrowers to remortgage every few years, typically when a fixed rate ended.
Some financial experts believe that mortgage rates are unlikely to fall any lower, but house prices could rise by 3 per cent or 4 per cent this year alone.
David Hollingworth of London & Country mortgage brokers said: “Mortgage repayments are most households’ biggest outgoing, so reviewing your rate now is likely to yield big savings”.
Back in April this year Yorkshire Building Society relaunched its 10 year fixed rate mortgage. The deal had a rate of 3.99 per cent for mortgages up to 75 per cent loan to value (LTV) and it came without a product fee, although it did have a small processing charge of £130.
Brendan Gilligan, product manager of Yorkshire Building Society, said at the time “we have seen strong demand for our 10 year fixed rate mortgages in the past so we are pleased to be able to offer this option once again”.
Following this in May 2013 Santander launched a record low 10 year, fixed rate mortgage at under four per cent. Those with a 40 per cent deposit could lock into a 3.94 per cent rate with a fee of £995.
More recently however, the Norwich & Peterborough building society introduced lowest rate on the market with its 10 year fixed mortgage at a rate of 3.84 per cent.
The mortgage has no product fee and is available on mortgages up to 75 per cent Loan To Value (LTV). It also comes with incentives including a free valuation, £200 cashback on purchases or free legal assistance on remortgages.
Richard Barker, Norwich & Peterborough product manager, said: “This is the lowest 10 year fixed rate product on the market so we expect a lot of interest.”
Analysis of the current mortgage market shows that this particular deal is undercutting its parent brand Yorkshire building society which is currently offering 3.89 per cent on its 10 year fixed rate mortgage.
Homeowners should bear in mind that if they want to ditch their deal before the 10 years are up, they will be hit with steep early repayment charges.
This makes this type of mortgage better suited to those who feel they are in their ‘home for life’ and unlikely to move. However, the deals are usually portable and so can be taken to a new property, but the lender will need to approve the move at the time.
Many lenders who offer these long term mortgages do so as they believe that they offer ‘borrowers long term peace of mind.’
All this said those looking for a 10 year fixed rate mortgage, there is still a relatively slim choice on the market, far fewer than two and five year fixed mortgages.
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