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Nationwide 25-year fix at 6.39% has decade’s ERC

Nationwide has responded to Chancellor Alistair Darling’s calls for more 25-year fixed-rate mortgages by introducing a loan starting at 6.39 per cent.

But the product has been described as uncompetitive by Savills Private Finance director Melanie Bien.

The mortgage is fully portable and has no early repayment charges after the first 10 years. The rate rises from 6.39 per cent for house purchases up to 90 per cent loan to value to 6.89 per cent for remortgages up to 95 per cent LTV.

Bien says: “The rates are not the best in the market with other 25-year fixed products starting from 5.99 per cent.”

She says the early repayment charges for the first 10 years mean it is more like a 10-year fixed product but that 10year fixes have better rates.

The Nationwide launch follows Darling’s announcement that he is to start consulting on creating a regime for covered bonds which will help lenders finance more affordable 20to 25-year fixed rates.

Nationwide executive director Stuart Bernau says: “The Chancellor has recently expressed concern that most lenders do not offer long-term fixed rates. Our experience is that the 25-year fixed rate has a place in the market and offers long-term stability and flexibility for borrowers who want to protect against fluctuations in interest rates.”

Yorkshire Building Society is also working on a new product which it claims will radically change the consumer’s view of longer-term products. It plans to make an announcement in the coming weeks.


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