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Product matters

Coventry Building Society has had a strong start to the year, with some competitive products forcing the lender to repeatedly make quick withdrawals to ensure service holds up.

One of the products worth a second look is the 10-year offset fixed rate. Currently priced at 5.99 per cent, the deal carries an arrangement fee of £999 and offers a free valuation. Those remortgaging to the society can benefit from free legal work.

On the face of it, the rate is nothing special and this product will not win any plaudits from those solely interested in the cheapest rate. Whether looking to fix for five, 10 or even 25 years, the rate can be comfortably beaten.

However, the product carries some other aspects of interest. The Treasury remains keen on long-term fixed rates as a means of maintaining stability in the market. The main problem with long-term deals has been the fact that they impose early repayment charges for the duration of the fixed rate. This inhibits flexibility and many borr-owers are not happy to lock in for 10 years or more.

This product looks to solve the problem by only applying an ERC for the first five years, leaving the borrower free to reconsider if necessary or continue with the fix. It is unlikely to capture a large amount of interest but this feature, along with the ability to offset, makes it a more interesting product than it perhaps first appears.

David Hollingworth is head of communications at London & Country Mortgages

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