The deals, which track three-month Swiss Euro LIBOR, are available for residential and buy-to-let, and will initially be exclusive to John Charcol and UK Commercial Funding Group – although there may be plans to extend the distribution in the near future.
The residential deals have a rate of 3.99 per cent and carry a 0.5 per cent arrangement fee while the buy-to-let product has a rate of 4.25 per cent, a rental cover of 125 per cent of the initial pay rate and an arrangement fee of 1 per cent. All are five-year deals.
Tony Capon, head of intermediary support at Derbyshire Building Society, said: “These products are unique to the market. There are other UK providers, like ourselves, that have Euro LIBOR deals but we are first to offer Swiss LIBOR mortgages in this country. Because the three-month Swiss LIBOR is very low we are able to offer products at very competitive rates.
“As it is all expressed in sterling, there is absolutely no currency risk to the borrower. Like Euro LIBOR, Swiss LIBOR is staying consistently low so it offers the borrower a great deal of stability. We expect that some other niche players may look at this market but not the big firms like HBOS.”
Ray Boulger, senior technical manager at John Charcol, commented: “We believe there will be good demand for these products. The maximum LTV on the buy-to-let deals is 80 per cent but investors will still find this attractive as the gross rental yield is low at 4.25 per cent which is the most important factor for borrowers. Compared to the UK Base Rate, Swiss rates tend to stay more level.”
