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Lenders add longer fixes

Mortgage lenders are continuing to jump on the 25-year fixed-rate bandwagon following the Government’s call for more choice of long-term fixed rates.

Yorkshire Building Society and London & Country are now both offering the 25-year fixed-rate loans after earlier moves by Nationwide and Halifax.

Chancellor Alistair Darling said in July he is to start consulting on creating a regime for covered bonds which would help lenders finance more affordable 20-year to 25-year fixed-rate deals.

Yorkshire is offering two 25-year fixed rate products with rates of 6.29 per cent and 6.49 per cent. The 6.29 per cent loan has an early repayment charge of 3 per cent for the first 10 years, while the 6.49 per cent option has a 3 per cent ERC for the first five years.

London & Country’s product has no early repayment charges and the rate is fixed at 5.99 per cent for any term up to 30 years. It has an arrangement fee of 2 per cent. Borrowers will get a 2 per cent loyalty bonus in year 10 and year 20.

Savills Private Finance associate director Melanie Bien says: “L&C’s product is at a good rate and it has an advantage with the penalty-free element but I am not sure there is still that much demand for these products. I think there is an element of bandwagon-jumping going on after what the Government said.”

Brentchase Financial Services mortgage specialist Mike Fitzgerald says: “If people want these products, then we should have them. It is right for some but you would be a foolish broker to advise every client on taking a 25-year fixed-rate product.”

Yorkshire Building Society claims it has seen a significant increase in sales of five and 10-year fixed-rate homeloans over the last year and these new products will help the company to test customers’ appetite for longer-term deals.


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