Best buy five-year fixed-rate mortgage launches
Fixing your mortgage repayments until 2021 has just become cheaper as West Bromwich has slashed rates on its five-year fixed deals.
The building society will now let borrowers fix at 2.09% until November 2021, providing you’ve got a deposit of at least 35% and you’re purchasing in England or Wales.
Arrangement fees of just £199 make this offer the best five-year fix on the market, even though lower rates are available elsewhere.
HSBC, for example, lends at a lower 1.99% fixed until August 2021, but its fees are almost £1,000 more. For someone borrowing £150,000 over 20 years, over the fixed five-year period, the West Brom deal will cost £46,099 including fees, which is £577 cheaper than HSBC’s 1.99% fix over the same period. West Brom also waives its arrangement fee for remortgages.
David Hollingworth, mortgage expert at London & Country, says five-year mortgage costs are now dropping after a new-record low ten-year fixed rate deal was launched last week
He says “Fixed rates have already reacted to market expectations of rates staying lower for longer due to the uncertainty around Brexit. That has started to move into fix rate deals, particularly in the longer term, such as the launch of the new [record low] deal from Coventry Building Society.
“We’re also seeing that filter through in five year deals. The West Brom’s 2.09% five-year fix isn’t the absolute lowest rate, but there’s a low fee of £199 for purchases and nothing for remortgages.”
The West Brom has also cut rates on five-year fixed rate deals for people buying with smaller deposits, or remortgaging with a lower equity stake in their home. It lends at 2.39% for people for people borrowing at up to 80% loan-to-value. This also has a £199 fee for buyers, though they could qualify for a £500 cashback payment on purchases or home moves.
This deal has no cashback for people who are remortgaging, but here you won’t have to pay a booking fee either.
Changing mortgages without moving home. Property owners chiefly remortgage to get a better deal but some do so to release equity in their homes or to finance home improvements, the costs of which are added to the new mortgage. Even though you’re not moving house, you still need to engage solicitors, conveyancing and the new lender will require the property to be surveyed and valued.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
A charge some brokers (and, increasingly, lenders) make for arranging your loan or mortgage, either as a flat fee or a percentage of the amount you wish to borrow. In order to look ultra-competitive in the best-buy tables, some mortgage lenders will offer mortgages with an attractive low rate and recoup any losses with a hefty arrangement fee.