Atom Bank unveils 'exceptional' five-year mortgage fixed at 1.29%
Atom Bank has refreshed its mortgage range and now offers some of the cheapest products on the market, with rates starting at 1.29% for a five-year fix.
Perhaps better known for its savings products, which must be opened and operated using a smartphone app, Atom Bank also offers mortgages to consumers who use a mortgage broker.
After topping the savings best buy tables for much of the year, Atom is now targeting the mortgage market with its “disruptive pricing” strategy.
Its top deal is a five-year fix at 1.29% for borrowers with a 40% deposit. This product comes with a £900 fee and the rate is fixed until June 2022.
For smaller deposits there is a 90% loan-to-value (LTV) five-year fix on offer at 1.99%. This also comes with a £900 fee.
After the fixed period, both products revert to the standard variable rate (SVR), which is currently 3.75%.
Atom Bank’s mortgages are also available for remortgaging, although they are only available through a limited panel of mortgage brokers, a list of which can be found on the Atom website. You need to have completed the term of the mortgage by the time you’re 80.
Maria Harris, Atom Bank director of retail mortgages, says: “This move is entirely unprecedented, but we know consumers have an appetite for it. The recent success of our disruptive savings pricing has taught us that.”
Peter Gettins, product manager mortgage broker L&C, says: "Atom’s new fix at 1.29% is by far the lowest five-year fixed rate ever seen and stands head and shoulders above the rest of the market. The next comparable deal is 1.74% from First Direct which also has a higher fee of £1,499 fee, so it really is exceptional.
"While the products won’t be suitable for everyone because you’re tied for the full five years, Atom have deliberately priced these products the same as their two-year fixes, meaning borrowers seeking some stability are no longer faced with the dilemma of length versus cost."
Every mortgage lender has a standard variable rate of interest, or SVR, on which it bases all its mortgage deals, including fixed and discounted rate and tracker mortgages. When special deals come to an end, the terms of the deal usually state that the borrower has to pay the lender’s SVR for a period of time or pay redemption penalties. The lender’s SVR is, in turn, based on the Bank of England’s base lending rate decided by the Bank’s Monetary Policy Committee (MPC). Every time the MPC raises its rate, mortgage lenders generally increase their SVR by the same amount but when the MPC lowers its rate, lenders are often slow to pass this on or don’t pass on the full cut to borrowers.
Changing mortgages without moving home. Property owners chiefly remortgage to get a better deal but some do so to release equity in their homes or to finance home improvements, the costs of which are added to the new mortgage. Even though you’re not moving house, you still need to engage solicitors, conveyancing and the new lender will require the property to be surveyed and valued.