by Mark Johnston
Yorkshire Building Society re-launches 10 year Mortgage.
It appears that in recent months borrowers have been taken advantage of the current low mortgage rates by fixing their payments.
Though mortgage rates have been increasingly falling since the launch of the funding for lending scheme last year, lenders have faced a great deal of criticism for fees which have risen and swallowed up much of the benefit to borrowers.
So the Yorkshire building society has therefore recently decided to re-launch its 10 year fixed rate mortgage. This deal comes with a rate of 3.99 per cent for mortgages up to 75 per cent loan to value (LTV).
Though the most important part of this deal is the fact that it comes with out a product fee, although it does come with a small processing charge of just £130.
The building society’s mortgage is also portable, meaning borrowers can transfer it to a new property if they decided they wanted to move from now until 2023.
However, the major downsize to this particular deal is the early redemption fees, for the first 3 years these are set at 7 per cent of the amount borrowed. In years 4 and 5 this slips down to 6 per cent, years 6 and 7 are 4 per cent, with years 8 and 9 set at 2 per cent and in the final year just 1 per cent.
Brendan Gilligan, product manager at Yorkshire building society, says “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”.
Leeds building society also has a 10 year fixed rate mortgage at 3.99 per cent on a 75 per cent loan to value (LTV), but this deals comes with a hefty fee of £1,999.
The HSBC too offer the same rate, although borrowers need a 40 per cent deposit for this deal and the fee is still more than the Yorkshire building society’s deal at £999.
At the moment the Yorkshire building society deal is a market leader, but it is a sparsely populated sector of the market.
According to Moneyfacts, a financial data website, there are only 25 ten year deals available on the market at the moment.
The Norwich and Peterborough building society launched a 10 year deal at the start of 2012, which sold out within two weeks and was then therefore withdrawn. However, when it was launched it was against a backdrop of higher rates on shorter fixed rate deals, so it made this particular deal much more attractive than it does at the moment.
So therefore for the Yorkshire building society deal to prove popular it will depend on whether or not home owners and buyers are looking for long term security.
It is also worth noting that the bank of England has recently announced that it is extending its funding for lending scheme by another year till 2015. This could mean that the record low mortgage rates are here to stay, thus making 10 year fixed deals less appealing than this time last year.
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