first direct launches new two year fixed rate offset mortgage

first direct, the only bank to immediately pass on last week’s Bank of England base rate cut to all variable rate mortgage customers, has launched a market-leading two year fixed rate offset mortgage priced at 4.99% (6.6% APR).

The rate is a limited offer available from today, Thursday 13 December. Following the fixed rate period, it reverts to a competitive standard variable rate (SVR) of 6.50% - a full 1% lower than the equivalent rate from Halifax.

Over 10% of the direct bank’s customers now have offset mortgages, enjoying the financial benefits of linking day-to-day savings to their current account and mortgage. Because a homeowner’s savings and current account balances earn the same rate of interest as their home loan, and are used to reduce the interest paid on it, offsetting can take years off a mortgage.

Chris Pilling, first direct´s chief executive said: “We were delighted to be the only bank to immediately pass on the full base rate cut to our new and existing customers. We’re now offering a market-leading fixed rate as well. Our offset mortgages are unique in their flexibility. Not only can customers move home as many times as they like with no mortgage transfer fee to pay, they can also overpay, underpay and redraw funds without further approval at a moment’s notice - at the same great rate that they originally fixed the mortgage.”

The first direct fixed rate offset mortgage gives borrowers:

a market-leading rate of 4.99% fixed for two years (equivalent to
6.6% APR)
ability to move their mortgage to a new property during the fixed
rate as many times as they like with no mortgage transfer fee to pay
reversion to an extremely competitive standard variable rate (SVR) -
currently 6.50% - at the end of the fixed rate term
maximum LTV is 80%
minimum loan size is £15,000, maximum £300,000
the flexibility to make unlimited overpayments in either lump sums or
regular payments
no tie in to the SVR at the end of the term. Borrowers are free to
opt for another fixed rate
the mortgage has an arrangement fee of £999 and booking fee of £499
current mortgage exit fee £149