1.55% five-year fixed mortgage from Yorkshire building society
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1.55% five-year fixed mortgage from Yorkshire building society

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Editor
Found 28th Sep 2017
Fancy a five-year fixed mortgage?

If so, this deal from Yorkshire building society is worth checking out. It’s been launched at a time of increased speculation that interest rates could start to rise by the end of the year.

Yorkshire building society is offering a five-year fix at 1.55%. The deal is available up to 65% loan-to-value (LTV) – i.e. if you have a 35% deposit.

According to Moneyfacts, Yorkshire’s 1.55% five-year fix at 65% LTV is currently the lowest five-year fix on the market for house purchase customers, and the joint current lowest remortgage five-year fix with Monmouthshire Building Society.

However, you need to factor in an arrangement fee of £1,495.

To work out of this is the best deal for you, you need to add up the monthly payments over five years (i.e. 60 x your monthly payment) plus the £1,495 fee. Then compare it to other deals using the same calculation.

As a general rule, the bigger your mortgage the more important the rate and the less important the fee, and vice versa.
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Nobody can predict what interest rates will do so don't listen to other people.

I did and fixed my mortgage with a low ltv at 2.99% with a £495 fee back in 2014. The same product now with the same bank is 1.99% with no fee. The press were telling everyone to fix and then the Base rate went down


The bank of England have said they expect small rate rises to happen over the next 2 years.

Choose a monthly payment you can afford and a product that best suits your needs and live your life. Remember to review again a few months before your fix ends.

Generally it's not worth paying a fee unless you've got a big mortgage.
Edited by: "ses6jwg" 28th Sep 2017
34 Comments
60x your monthly payment plus £1495, no?
If this is true interest rate will go up in the near future, why banks release such a good deals now when they could make more money. only asking.
mariolj6 m ago

If this is true interest rate will go up in the near future, why banks …If this is true interest rate will go up in the near future, why banks release such a good deals now when they could make more money. only asking.

Highly competitive market. So until rates do rise they are fighting for your custom.
They won’t make more money when the interest rate rises. Arguably they’ll make less because higher interest rates means less people can afford mortgages or the same people can afford less so the banks won’t do as much business.
YIMan31 m ago

They won’t make more money when the interest rate rises. Arguably they’ll …They won’t make more money when the interest rate rises. Arguably they’ll make less because higher interest rates means less people can afford mortgages or the same people can afford less so the banks won’t do as much business.


The bank take in the same interest on borrowings of £300,000 at 3% as they do on £200,000 at 4.5% so your argument doesnt stand up.
mariolj1 h, 47 m ago

If this is true interest rate will go up in the near future, why banks …If this is true interest rate will go up in the near future, why banks release such a good deals now when they could make more money. only asking.



When I took out a mortgage - and then a couple of times when remortgaging - I have gone for a fixed rate, as interest rates were always "about to go up". That was 7 and a half years ago...
zabada3 m ago

When I took out a mortgage - and then a couple of times when remortgaging …When I took out a mortgage - and then a couple of times when remortgaging - I have gone for a fixed rate, as interest rates were always "about to go up". That was 7 and a half years ago...

Absolutely... they arent going anywhere until after brexit withdraw - and even then ... it may take several years.
Nobody can predict what interest rates will do so don't listen to other people.

I did and fixed my mortgage with a low ltv at 2.99% with a £495 fee back in 2014. The same product now with the same bank is 1.99% with no fee. The press were telling everyone to fix and then the Base rate went down


The bank of England have said they expect small rate rises to happen over the next 2 years.

Choose a monthly payment you can afford and a product that best suits your needs and live your life. Remember to review again a few months before your fix ends.

Generally it's not worth paying a fee unless you've got a big mortgage.
Edited by: "ses6jwg" 28th Sep 2017
marathonic23 m ago

The bank take in the same interest on borrowings of £300,000 at 3% as they …The bank take in the same interest on borrowings of £300,000 at 3% as they do on £200,000 at 4.5% so your argument doesnt stand up.



Which bit doesn't stand up?
ses6jwg14 m ago

Generally it's not worth paying a fee unless you've got a big mortgage.



Exactly this, the fee isn't stated in the title or I wouldn't have even bothered to click in, the fee on this knocks out any savings over 5 years over my current tracker. I think we should state any arrangement fee in the title on here, since it directly affects how good the 'deal' is. In my mind, it would be like someone listing a contract mobile and only listing the £5 per month contract and not stating the £500 deposit required to get that.
Err, nice deal but then read through the original post it says you need to find £1495 up front to get this 5 year deal. This is as important as the rate on balance, are you willing to amend the title?
marathonic1 h, 18 m ago

The bank take in the same interest on borrowings of £300,000 at 3% as they …The bank take in the same interest on borrowings of £300,000 at 3% as they do on £200,000 at 4.5% so your argument doesnt stand up.


That's because you don't understand banking. YIMan is correct.

As others have said, the fees ruin this deal.
Be aware when you redeem that they can con you by charging interest for the following month.
You need to make sure you exchange on the final day.

Truely awful customer service as well.
ro53ben55 m ago

That's because you don't understand banking. YIMan is correct.As others …That's because you don't understand banking. YIMan is correct.As others have said, the fees ruin this deal.



Financials are one of the sectors that benefit most as interest rates rise

Financial Shares Climb as Investors Bet on U.S. Rate Rise

Barclays shares post biggest gain after Bank of England's chief economist sparks speculation that rate rise may be imminent

That's just a quick google search result - I could post many more examples.

On Bloomberg TV this morning, there was an economist discussing how shorting the 10-year German bund market (betting on rate rises) costs 0.3% per year so shorting means that you'd need them to rise to 0.8% over the next year to break even. He advised buying financials instead as financials will gain with the rate rises and, instead of costing you 0.3% per year, you'd be getting paid a dividend to wait for the inevitable rate rises.
Edited by: "marathonic" 28th Sep 2017
YIMan1 h, 55 m ago

Which bit doesn't stand up?


The entire statement "They won’t make more money when the interest rate rises. Arguably they’ll make less"

Banks have been in tough times recently but, back when rates were much higher, they were making huge profits and stocks like Lloyds and Barclays were paying huge dividends.
Edited by: "marathonic" 28th Sep 2017
marathonic17 m ago

Financials are one of the sectors that benefit most as interest rates …Financials are one of the sectors that benefit most as interest rates riseFinancial Shares Climb as Investors Bet on U.S. Rate RiseBarclays shares post biggest gain after Bank of England's chief economist sparks speculation that rate rise may be imminentThat's just a quick google search result - I could post many more examples.On Bloomberg TV this morning, there was an economist discussing how shorting the 10-year German bund market (betting on rate rises) costs 0.3% per year so shorting means that you'd need them to rise to 0.8% over the next year to break even. He advised buying financials instead as financials will gain with the rate rises and, instead of costing you 0.3% per year, you'd be getting paid a dividend to wait for the inevitable rate rises.


Quoting a load of irrelevant links still doesn't mean you understand how banks work. In the context of mortgage lending, which this thread is about, you are wrong.
marathonic19 m ago

The entire statement "They won’t make more money when the interest rate r …The entire statement "They won’t make more money when the interest rate rises. Arguably they’ll make less"Banks have been in tough times recently but, back when rates were much higher, they were making huge profits and stocks like Lloyds and Barclays were paying huge dividends.



My post was a response to the earlier post stating the belief that banks would make more money if the interest rates went up...i.e. inferring that the bank sees all the benefit of the interest rate rise. This is incorrect. The bank generally makes BOE interest rate plus whatever margin it can make. So theoretically it doesn't matter if the interest rate is 2% or 5% if the bank makes say BOE base rate plus 1%e

HOWEVER....if the BOE base rate rises to 5%, mortgages will become less affordable than they are at BOE 2%.....therefore the bank is likely to sell fewer mortgages therefore make less multiples of its 1% margin.

This may be slightly offset by the assumption that if interest rates rise, house prices may have to fall otherwise thereby potentially to some extent offsetting reduced mortgage affordability.

BUT...don't forget that if interest rates rise, the cost of un-fixed loan/credit card debt will also rise, further impacting affordability.
Edited by: "YIMan" 28th Sep 2017
For me HSBC 5 year fix @ 1.59% with £750 fee is so best, although that is for 60% ltv
Hopefully this is an indication of rates staying static/reducing and more competitive deals on the horizon.
Edited by: "IndyS" 28th Sep 2017
Indy S Doubt it , every indication that it's going to go up in the next few months or not?

Just mentioned on Sky news the the Bank of England said interest hike was not imminent , and she replied to that saying does that mean there is to be one.
Edited by: "morrig" 28th Sep 2017
I personally wish rates would go up, would do the UK a big favour.
Rates are going nowhere.. if they were, this would be priced in the money market deposits and therefore passed onto consumer.. still for piece of mind not a bad premium to pay unless you think of it as 100% more interest than at .99
I have been with Yorkshire for the past 10 years, 5 year fix started at 5.5% then fell to 3.75% after the 5 years were up, have I switched? No, because its an offset mortgage and at 3.75% I am getting over 4% on my savings when you factor in the tax and only paying the interest on a very small amount, so dont always look at the headline figure the mortgage needs to fit your needs and lifestyle, by the way mine had no fees and £1000 cashback when i took it out
£1500 product fee? Scandalous!

Might be ok if you've a massive outstanding mortgage but, as has been said by the Op, you need to work out whether or not you'd benefit.

i certainly wouldn't ...unfortunately.
Edited by: "DAZZ2000" 28th Sep 2017
let's say my house is worth £500K

I have a £50K mortgage on it, should be repaid in 5 years

can I get another £100K mortgage from YBS?

what would I say? - need a new kitchen & carpets?

no intention of moving
If you have outstanding mortgage more than 250 K, then YBS is better than Santander fixed 5 yrs mortgage.
Original Poster Editor
PepsiCommentator11118 h, 53 m ago

60x your monthly payment plus £1495, no?


Yep, you're correct! Sorry about that, I have changed it now. Thanks for pointing it out.
margamboy13 h, 52 m ago

I have been with Yorkshire for the past 10 years, 5 year fix started at …I have been with Yorkshire for the past 10 years, 5 year fix started at 5.5% then fell to 3.75% after the 5 years were up, have I switched? No, because its an offset mortgage and at 3.75% I am getting over 4% on my savings when you factor in the tax and only paying the interest on a very small amount, so dont always look at the headline figure the mortgage needs to fit your needs and lifestyle, by the way mine had no fees and £1000 cashback when i took it out


You're not getting 4% on your savings at all. Juggle the numbers all you like but you can't overpay for interest on your mortgage then claim your getting this as a return on your savings.

If this worked, we'd all be signing up to 100% mortgages and that offsetting to get 101% interest on our savings. It doesn't work like that.

You have an offset mortgage at 3.75% - every £100 borrowed is costing you £3.75 a year. If you have £100 in savings, you are saving that £3.75 a year. You're not gaining, you're just not paying interest unnecessarily on money you didn't need to borrow.

You would be better off shifting to a cheaper mortgage and using your savings to reduce the loan amount.
Due to the arrangement fee this is becomes less financially beneficial in a typical mortgage of about £130k. Better to go with a higher interest rate and lower fee.

However if you have a particular large loan size then this could be useful... It will have to be a particularly large loan however.

Not voted either way
Opted for the 1.75% offset. This is very good for those with larger loans but having the flexibility with offset seals it for me.
ro53ben29th Sep

You're not getting 4% on your savings at all. Juggle the numbers all you …You're not getting 4% on your savings at all. Juggle the numbers all you like but you can't overpay for interest on your mortgage then claim your getting this as a return on your savings.If this worked, we'd all be signing up to 100% mortgages and that offsetting to get 101% interest on our savings. It doesn't work like that.You have an offset mortgage at 3.75% - every £100 borrowed is costing you £3.75 a year. If you have £100 in savings, you are saving that £3.75 a year. You're not gaining, you're just not paying interest unnecessarily on money you didn't need to borrow.You would be better off shifting to a cheaper mortgage and using your savings to reduce the loan amount.


I did say the mortgage needs to fit your lifestyle etc, I understand that 3.75% is a higher rate than 1.5%, but an offset mortgage is totally flexible, can overpay when I ever I want, £500 spare end of one month chuck it in there, so instead of sitting in a current account earning 0.01% interest cause I have already maxed out all the best rates I stick in the offset account and that £500 saves me paying interest on that £500 of the outstanding mortgage, no interest is better than 1.5% interest. Plus unlike paying it off as you suggest I can access the money whenever I want, but whilst I don't need it it's working for me. It's been really surprising how quickly the amount in the offset built it, to a point that it now almost matches my outstanding loan amount, so before long I'll be paying zero interest on the lot.
Edited by: "margamboy" 13th Oct 2017
No interest is better than 1.5% interest, but 3.75% is considerably worse. Unless you're offsetting most of the balance, you're wasting money.

You don't need an offset mortgage to have a flexible mortgage. Most arrangements now allow for overpayments, underpayments, payment holidays etc. But they don't need to be stupidly over-expensive on the rate like offset mortgages tend to be.
Where just around to remortgage to YBS to an offset. They have a fantastic product which allows linked accounts from family and friends so thankfully on our £250k nearly £175 k is going to be offset by grandparents. The rates 1.59%. If anyone is in a similar position it's a no brainer
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