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First-time Buyers

Hinckley & Rugby launches interest-only mortgage

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
13/12/2012

Hinckley & Rugby Building Society has launched an interest-only mortgage, available from tomorrow.

The lender’s two-year mortgage will be available up to 50% loan-to-value at a rate of 4.99%. This rate represents a 0.65% reduction on the lender’s Standard Variable Rate (SVR), which is currently 5.64%.

Hinckley & Rugby said that it felt interest-only mortgages still had a place in the market but as a small lender was unable to offer a mass market product.

The mortgage has an arrangement fee of £395 and a completion fee of £695, although the latter can be added to the loan. Loans are available up to £1.25m.

This move comes after several major lenders took the decision to withdraw from the interest-only market. Coventry Building Society followed the withdrawal of NatWest and RBS from the interest-only market during November.

Fellow mutual Nationwide stopped accepting new interest-only applications in October.

Chris White, chief executive Hinckley & Rugby, said: “Several very large lenders have already pulled out of interest only mortgages but we feel there is still a strong case for offering this type of product in the right circumstances.

“At the same time, we don’t have the capacity or risk appetite to fulfil the potential demand for interest only loans that might result from the largest lenders exiting the market.

“We have offered interest only mortgages for a long time. This new mortgage sees us condense our interest only offer into one distinct product which provides a focus for those customers and their intermediaries who are looking for interest only.

“We will keep the success of this scheme under careful review.”

The society is also cutting interest rates on four more products. Its two-year discount mortgage at 90% LTV has been lowered from 4.64% to 4.24%, with an arrangement fee of £295 and a completion fee of £695.

At 80% LTV the same product is available at 3.15% with an arrangement fee of £195 and a completion fee of £695.

Its five-year fixed rate mortgage has also been reduced to 3.79%, available up to 80% LTV. An arrangement fee of £195 and a completion fee of £695 also apply to this product.