Coventry Building Society to launch lowest ever 10-year mortgage

The lowest 10-year mortgage rate on record is set to be launched on Friday, and more cuts could be on the cards as lenders take advantage of falling money markets to offer cheap deals.

Coventry Building Society is to offer a rate of just 2.39% for borrowers willing to fix their loan for a decade. The mortgage, which beats the previous best-buy rate of 2.84% from Leeds Building Society, has a fee of £999 and is available only to borrowers with a minimum 50% deposit.

Before the referendum, George Osborne warned that a Brexit vote would lead to higher mortgage rates, but there were already signs that fixed-rate loans could fall as yields on safe government bonds started to drop.

Darin Landon, distribution director at Coventry, said: “The recent fall in swap rates means we have an opportunity to offer market-leading rates to borrowers looking for long-term security in these uncertain times.

“Today’s market is particularly fast moving, however, so I’d encourage borrowers to act quickly.”

Andrew Montlake of mortgage broker Coreco described the rate as extraordinary. “I never thought I’d see a 10-year fixed rate that low – it’s not so long ago that we were wondering if five-year rates would fall that far.”

Montlake said the mortgage should appeal to someone who was remortgaging or downsizing from a large property. He added that the rate suggested banks and building societies were still actively interested in lending, and that he would not rule out even lower rates in the weeks ahead. “In this market anything is possible,” he said.

Coventry has launched a separate deal for borrowers with a smaller deposit, offering loans of up to 65% of a property’s value at a rate of 2.49%.

Both deals have early redemption charges for borrowers who want to pay off their loan before the end of the 10-year term. These are equal to 5% of the repayment until 30 September 2018, 3% until 30 September 2021, then 1% for the rest of the mortgage term.