Manchester BS offers 25-year fix
Manchester Building Society has bucked the trend and launched a long-term fixed-rate mortgage which can be taken out for between 10 and 25 years.
The rate is 5.84 per cent for house purchase or remortgage and the loan-to-value is 80 per cent. There is an arrangement fee of £995 and applicants must be aged between 25 and 70. Early repayment charges apply if the borrower redeems the mortgage within the first seven years.
Ben Thompson, managing director of Legal & General Mortgage Club said the mortgage comes at an interesting time, in a week when HSBC’s record-low fixed-rate mortgage was pulled due to its popularity.
He commented: “With a rate of 5.24 per cent, it is not in the same league as the sub-3 per cent mortgages that have been available since the Funding for Lending Scheme was introduced, but it does give the borrower 25 years of security.
“Most borrowers are only willing normally to commit for a much shorter time frame unless porting to a new home is guaranteed and the headline rate is very low. With this scheme the headline rate can be easily beaten by five-year fixed rates and borrowers can take trackers with no early repayment penalties at low rates as well, and fix as rates start to rise.
“I suspect that this is therefore not for the masses, but was never launched with that in mind. It is good to see a different and innovative approach again from the building society sector as opposed to the constant fight to attract the lowest risk borrowers at headline grabbing rates."