Fixed-rate mortgages appear to be a lasting hit with prospective home buyers, and Yorkshire Building Society has decided to capitalise on this by launching two new fixed deals that will be available from June 23.
The new fixed-rate mortgages
apply to both house purchase and remortgage customers. A two-year fixed-rate mortgage will be available at 5.99 per cent with a £1,995 fee, while those looking for a longer-term option may opt for the five-year deal, also with a 5.99 per cent rate, but with a £2,495 fee. Both deals are available at a maximum loan-to-value (LTV) of 75 per cent.
Fees can be added to the mortgage even if the maximum 75 per cent LTV has been borrowed, and borrowers can overpay on their mortgage by up to 10 per cent each year if they wish to repay the fee before the end of the full mortgage term. Free legal and valuation services are also provided for remortgaging customers.
Tom Girling, Yorkshire's product manager for mortgages said: "In the current environment fixed rates on both mortgages and savings seem to be rising every week, with some borrowers finding it very difficult to afford their mortgage payments. These new products have been designed to help borrowers manage their monthly budgets and at the same time provide peace of mind from the security that their payments won't change during the term they have chosen."
Research from Legal & General shows that, despite the rising prices of fixed mortgages, customers are still lapping them up. It claims that 75 per cent of residential mortgages in the second quarter were fixed-rate deals compared with 57 per cent in the first quarter.
The company's Mortgage Purchase Index also revealed that 58 per cent of buy-to-let mortgage
deals were fixed, compared with 35 per cent in the first quarter. Meanwhile, the average LTV for residential mortgages has fallen from 66 per cent to 63 per cent and the average LTV for buy-to-let mortgages has dropped from 76 per cent to 67 per cent.
The figures show that the average two-year fixed-rate mortgage
deal rose from 5.87 per cent to 6.51 per cent in the second quarter, while the average five-year fix has risen from 5.82 per cent to 6.34 per cent and the average 10-year fix has stayed flat at 5.97 per cent.
Director of housing at Legal & General, Stephen Smith, said: "There has been a huge jump in the number of homeowners opting for fixed-rate mortgages despite the significant increase in rates, particularly for two and three year deals. It shows how risk averse the UK mortgage population is if we still prefer to choose certainty over value.
"Three quarters of the people that went through our Mortgage Club to get their residential mortgage chose a fixed-rate compared to just over half three months ago. This is a significant shift, and is close to the highest proportion that we have ever seen."