Cheshire increased its rates from 4.99 per cent, to 5.97, a rise of 0.98 per cent. It attributed these rises to other lenders and a spokesperson for Cheshire Building Society, said: “We compare our rates with other lenders and made changes to our 20 and 25-year fixed rate deals.” The 25-year offer has no higher lending charge up to 90 per cent of the loan-to-value (LTV), with loans above 90 per cent LTV incurring a charge that can be added to the mortgage loan.
Alan Lakey, senior partner at Highclere Financial Services, said: “It does seem a bit of a jump, but I am not sure how popular the 25-year fixed rates are. I like the flexibility that you can ‘jump ship’ with the annual windows in the sixth year onwards, every two years, without an early repayment charge, but if you were to do this it would be better to get a shorter term fix and save on the initial rate. It may suit people who want certainties over exactly what they are paying, but I would think that most people would rather save on the rate by getting a shorter deal.”
Another broker, who wished to remain anonymous, argued the 25-year term deal was still very competitive. He said: “Over the last 10 years or so, the average rate has been about 6-7 per cent, so the 5.97 per cent deal is competitive. It is a fair indication of how lenders see the market, and rates going, and Cheshire has hedged its bets. The 0.9 per cent increase is quite high, but still leaves a competitive offer. I would hope the deal was portable, but mortgage borrowers must take into account that they will be with the Cheshire for a long period.”
