Offer capped at £550,000, enough to cover average London house price of £547,000
irst Direct is the latest lender to offer a longer-term fixed rate mortgage deal aimed at borrowers facing simultaneous rises in interest rates, inflation and house prices.
The online-only bank has unveiled a 10-year fixed-rate mortgage on home loans of up to £550,000 and over full terms of up to 40 years. It comes as the Bank of England lifts interest rates from the historic lows reached during the pandemic, when the economy required emergency support. Rates have been increased by the Monetary Policy Committee at each one of its meetings this year and are usually passed on to mortgage borrowers on variable rate deals.
Repayments on fixed-rate mortgages remain the same for an agreed period, making it easier for borrowers to plan their finances. The loans have risen in popularity as inflation has returned, stoking a cost-of-living crisis across the UK as consumers grapple with rising fuel and food costs after the economic shock caused by Russia’s invasion of Ukraine.
Meanwhile, UK house prices have continued to rise relentlessly, reaching their fastest pace in over 17 years in June, when the annual rate of growth hit 13%, the highest since late 2004 according to data from Halifax, another mortage lender. Average house prices in London rose at a more modest 7.1%, but in the capital’s average house price is higher, reaching £547,000 compared with £295,000 nationally. First Direct’s upper limit on its new mortgage just covers the average cost of a London home.
“The cost of living crisis in particular has forced home-owners and prospective buyers to rejig their monthly incomings and outgoings, of which mortgage payments tend to take up the lion’s share,” said Chris Pitt, First Direct’s CEO.
“After a string of base rate hikes in 2022, the launch of this product is to give homeowners and buyers long-term peace of mind while external volatility – such as soaring house prices and rising utility bills – shows no signs of abating.”
Credit: www.standard.co.uk /