Yorkshire Building Society launches market-leading mortgate repayment rate
The mortgage price war has been stepped up with a building society launching a market-leading rate for borrowers who want to fix their repayments for the next decade amid the economic uncertainty.
Yorkshire Building Society is offering a 10-year fixed-rate mortgage with a rate of 2.89% for borrowers with a deposit of 25% or larger - following "strong customer demand" for longer-term deals following the vote to leave the EU.
Financial information website Moneyfacts confirmed the rate is the lowest on the market for borrowers with this size of deposit.
The deal, which has an £845 product fee, is available for either house purchase or remortgage.
Brendan Gilligan, mortgage product manager for Yorkshire Building Society, said: "We have launched this new 10-year fixed-rate mortgage in response to strong customer demand for a longer-term fix.
"These requests follow uncertainty about the economy and interest rates after the UK voted to leave the European Union."
He said the 10-year fix can be ported, so borrowers may be able to transfer their mortgage should they want to move house during the fixed-rate period.
A recent Bank of England report said that in discussions after the referendum, major lenders expected mortgage availability to be "little changed" in the near term - but they also anticipated that demand for mortgages would fall.
Lenders did not expect mortgage rates to change markedly - but some lenders said credit conditions could tighten if there was a deterioration in the economic outlook, the Bank said. This could make it tougher for some people to get a particular mortgage deal.
The Bank defied predictions by keeping the base rate on hold at 0.5% in July - but there have been suggestions that a rate cut may come next month - potentially making some borrowers' costs even cheaper.
The extent to which borrowers could expect to see a difference in their mortgage costs when the base rate does eventually change depends on whether their deal is directly tied to the base rate.
Some variable rate deals specifically track the bank rate. But others do not - and for these deals changes in the variable rate would be up to the individual lender, as the bank rate is just one of the factors lenders take into account when setting mortgage rates.
The Council of Mortgage Lenders' estimates suggest around 1.5 million existing mortgages are bank rate trackers.
According to the CML, around half of all existing mortgage holders across the UK are on fixed rates and half are on some form of variable rate deal.
Borrowers with a bigger deposit may want to consider a deal from Coventry Building Society, which is offering a rate of 2.39% fixed for 10 years for people with a 50% deposit.
Rachel Springall, a finance expert at Moneyfacts, said: "In times of uncertainty a decade-long fixed mortgage will provide borrowers with a long-term option to secure their monthly mortgage payments.
"Borrowers must always work out the true cost of any deal and be sure that their circumstances will remain relatively unchanged for the next 10 years so they can avoid early repayment charges.
"In this low rate market buyers should ideally be aiming to overpay on their mortgage whenever possible so that they can raise the equity in their home and reduce the term of the loan."