Yorkshire Building Society launches 15-year mortgage fix

Yorkshire Building Society has become the second UK lender to launch a 15-year fixed rate mortgage deal, as borrowers seek to lock in low interest rates for longer periods.

The mutual said it decided to launch its new range of 15-year mortgages after demand for its 10-year fixed rate mortgage products doubled year-on-year.

“With continued political and economic uncertainty, borrowers’ appetite for securing longer-term deals shows no sign of slowing,” said Charles Mungroo, senior mortgage manager at YBS.

“We hope the introduction of the new 15-year range gives more choice to those looking for peace of mind that their monthly mortgage repayments won’t change for a significant number of years.”

Borrowers with a 65 per cent loan-to-value can lock into a 15-year fix with an interest rate of 2.79 per cent. On home loans with a loan-to-value ratio of 90 per cent, the interest rate climbs to 3.65 per cent.

Virgin Money was the first to launch a 15-year fix last month, with rates starting from 2.55 per cent for borrowers with 65 per cent LTV, rising to 3.45 per cent for 90 per cent LTV.

Both ranges are available for home purchase or remortgage.

However, property experts have warned anyone considering taking such a long fixed rate deal to be aware of early repayment charges.

“Early repayment penalties are incredibly high and in place for the whole 15-year term,” said Adrian Anderson, director of mortgage broker Anderson Harris. “It is vitally important that any borrower is totally confident that they will not want to redeem the mortgage during the 15-year term, as doing so could cost thousands of pounds.”

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Virgin’s 15-year range carries an 8 per cent charge if the mortgage is redeemed before January 2025.

“On a £400,000 mortgage, this works out as a charge of £32,000, which is a lot of money,” Mr Anderson said.

The charge falls to 7 per cent by 2030, 5 per cent by 2032 and then drops in stages to 1 per cent before January 2035.

Yorkshire’s range carry a 6 per cent penalty if redeemed before January 2025, falling to 5 per cent in 2029 and in stages to 1.5 per cent.

This week, Bank of England mortgage data for July showed that UK high street banks approved the highest number of new mortgages since early 2017 and recorded a sharp increase in remortgaging, driven by low interest rates and a strong labour market, despite persistent uncertainty over Brexit.



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