Yorkshire Building Society is offering what it claims is the cheapest 10-year flexible fixed-rate mortgage with a rate of 5.44 per cent.
The loan allows unlimited overpayments without penalty charges, payment holidays and underpayments. Interest is calculated on a daily basis. Maximum loan to value is 95 per cent.
The average procuration fee available through Yorkshire's lending partnerships with a range of mortgage clubs and networks is 0.3 per cent of the loan although this varies depending on the agreement.
To attract first-time buyers, the society is waiving the arrangement fee of £325 and offering a free property valuation and help with legal costs.
Yorkshire says its research found that if the average mortgage rate stays at 5.59 per cent for the next 10 years, the interest on an interest-only mortgage of £70,000 would be £39,130 but its new product could save borrowers £1,050 over that period.
General manager (marketing) Iain Cornish says: “This product gives borrowers the security of fixing their mortgage interest over a long period when interest rates are at rock bottom.”
Charcol senior technical manager Ray Boulger says: “Birmingham Midshires launched a 10-year fix at 5.39 per cent in 1999 but Yorkshire's claim to be the lowest-rate flexible 10-year fix is justified. Its flexible features make it a a very nice product.”