Leeds BS launches variable rate mortgage range starting form 0.99%

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Leeds Building Society has launched a new range of discount variable rate mortgages starting from 0.99%.

For borrowers with a deposit of 35%, Leeds is offering a two-year deal with a 4.70% discount off the standard variable rate (SVR) of 5.69%, giving an initial rate of 0.99%. This mortgage comes with a £1,999 fee.

• Mortgage fees hit a five-year high as lenders lure in customers with cheap rates and sting them with extra costs

Fee free mortgages include a 1.47% two-year discount mortgage up to 65% loan-to-value (LTV) and 1.79% two-year discount mortgage up to 85% LTV.

Matt Bartle, Leeds Building Society’s head of product and pricing, says: “Fixed rate remains the most popular type of mortgage by some margin, both among our customers and in the UK generally, but there’s a trade-off. The interest rate and monthly repayments may be a little higher than if the borrower had chosen a variable rate but they have the security of fixed repayments which can help them to budget.”

He adds: “However, borrowers who aren’t expecting rate increases in the near future could choose a variable rate product with lower repayments, which is why we’re introducing these shorter-term discount mortgages.”

• Thousands of potential homeowners wrongly think they can’t get a mortgage

Should you take out a variable rate mortgage?

If you think the Bank of England’s base rate is likely to stay the same or fall then a variable rate could be for you. However, be aware that rates could rise at any time and leave you out of pocket.

While fixed rate mortgages tend to be more expensive, they can provide you with security against a rate rise.

By fixing you can keep your repayments the same so that any future rate changes won’t catch you off-guard.

The Bank of England has raised interest rates twice in the past 12 months, going up to 0.75% in August.

• House price growth hits five-year low as the squeeze on household budgets and Brexit uncertainty continue to bite

It has hinted that it could raise interest rates if the UK manages a smooth exit from the European Union.

While the Bank did not change rates this month, its latest forecasts suggest rates could rise to 1.5% over the next years.

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• Mortgage fees hit a five-year high as lenders lure in customers with cheap rates and sting them with extra costs
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• House price growth hits five-year low as the squeeze on household budgets and Brexit uncertainty continue to bite

Source Moneywise https://ift.tt/2Pz9fcm