Six-year deal shakes up mortgage market

Borrowers looking to fix their mortgages for a long time can now apply for a six-year loan.

And as well as giving long-term stability to homeowners, experts say the 72-month deal on offer from Virgin Money is competitively priced, too.

The rate is 2.99% for loans up to 70% of a property’s value, although it comes with a fee of nearly £1,000. Borrowers who want to avoid the fee can do so by paying a rate of 3.59%.

Virgin Money is one of a number of banks trying to boost its market share at the expense of the established high-street lenders, and it will be hoping that its six-year mortgages will cement its position as a growing force in the sector.

“With interest rates expected to rise in the near future, those looking to take out a mortgage, or remortgage, may want to consider fixing themselves to protect against future rate rises,” said Dan Plant, of Moneysupermarket.com, which is the only place where this deal can be taken out.

“By offering such a low rate over a market-leading period of six years, and with a high loan-to-value (LTV) rate, this deal should be accessible to many.

“I hope this launch is a sign of further product developments to come that can genuinely help homeowners.”

Andrew Hagger, an analyst with Moneycomms.co.uk, said the Virgin Money deal was competitive when compared with the best five-year fixes on the same LTV terms. For example, Nationwide is offering a five-year fix at 3.09% with a £999 fee.

For people with less of a deposit to put down, he pointed to long-term deals from the likes of Yorkshire Building Society (3.69% with a £975 fee, at up to 85% LTV), and First Direct (4.29% with a £950 fee, at up to 90% LTV).

“It’s not always the big high-street mortgage lenders that offer the cheapest deals, so be prepared to consider the new providers, too,” Mr Hagger said.

“The new rates from Metro Bank are very competitive, too – particularly the five-year fixed rate at 80% LTV.

“It’s anticipated that interest rates may start increasing in 2015 so it makes good sense to check out your options now before the market becomes too frenetic.

“Always use an independent mortgage broker to ensure you are getting the best deal sourced from the whole market.”