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Leeds & Holbeck offers fixed fortunes



Type: Fixed-rate mortgage

Fixed term: Until March 1, 2029

Fixed rate: 5.99%

Minimum loan: £25,000

Maximum loan: Up to 90% of valuation subject to a maximum of
£300,000, up to 85% of valuation subject to a maximum of £400,000,
up to 80% of valuation subject to a maximum of £500,000

Income multiples: Up to 90% of valuation &#45 3.5 times principal
income plus second or three times joint, up to 80% of valuation &#45 four
times principal income plus second or three times joint, up to 50% of
valuation &#45 four times principal income plus second or 3.5 times joint

Conditions: Three-month window for penalty-free redemption after
five years then every other year until end of fixed-rate period, capital
repayments of up to 5% allowed without penalty, free mortgage
payment protection insurance in first six months

Arrangement fee: £499

Redemption fee: Six months&#39 interest in years one to five, three
months&#39 interest in years six to 25

Introducer&#39s fee: Loans of up to £50,000 &#45 £125, loans above
£50,000 &#45 0.25% of original loan

Tel: 0121 643 6741

Leeds & Holbeck has re-established its 25-year fixed-rate mortgage
following speculation about the introduction of penalty-free long-term
fixed rate mortgages across Europe.

London & Country mortgage specialist David Hollingworth thinks this
mortgage is a good effort but suspects UK borrowers will continue to
look at cheaper short-term rates. He says: “This product is in a
market of two at the moment so it at least helps to fill the long-term
fixed rate niche. Most borrowers are currently keener on shorter-term
deals with cheaper rates. But with the continued discussion over long
term fixed rates, there may well be a slight increase in demand &#45
even if it remains the choice for a tiny minority.”

Examining the competition Hollingworth says: “There is only one
other product &#45 Cheshire BS fixed from 5.48 per cent for 25 years.
This has penalty- free windows in year six and every other year from
then on, with no penalties in the final five years.”

He points out traditionally, the problem with long-term fixed-rates is
that the borrower is locked in with penalties throughout the fixed rate
period. But he says: “Both this product and the other 25 year fixed rate
from Cheshire Building Society recognise this and allow borrowers to
open up penalty free windows from year six onwards, which is a
welcome feature. But while the penalty free windows are a good effort
at addressing the inflexibility of long-term deals it is still limited and
borrowers are likely to remain cautious about making a commitment,
especially at the higher cost.”

Hollingworth sees the long term fixed rates as a niche product and
predicts this deal will not exactly going to fly off the shelf. He explains:
“The problem for the product is really two-fold &#45 rate and lock-in
period. The rate at 5.99 per cent is not exactly sharp and not as keen
as its rival in the marketplace. Cheshire&#39s product currently charges
from 5.48 per cent. The Leeds & Holbeck product does not compare
too favourably with 10-year fixes either which are also coming in at
around 5.5 per cent.”

Finally, he complains that the £499 arrangement fee is higher than
the standard fee of around £300.

Suitability to market: Average

Competitiveness of mortgage rate: Average

Adviser remuneration: Good

Overall 7/10


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