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Borrowing becomes cheaper than ever as lender slashes five-year mortgage deal to below 1.3%

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In a move which has elicited genuine gasps in the mortgage world, a lender has slashed rates on a five-year fixed mortgage to just 1.29% – the same as for its two-year fixes.

Atom Bank only launched into the mortgage market in December, and its latest offer went live yesterday.

The digital-only lender is offering five-year rates starting at 1.29% on a 60% loan-to-value mortgage, with the rate fixed for five years. The rate goes up to 1.99% on a 90% mortgage, again fixed for five years.

Would-be borrowers may have to act fast as the offer is available for a limited time, and only through brokers.

Atom director of retail mortgages Maria Harris said: “This move is entirely unprecedented.”

Andrew Montlake, a leading figure in the mortgage industry, said: “Talk of disruption in the mortgage industry has taken many forms, with digital banks such as Atom being at the forefront of this.

“However, this latest move, offering five-year fixed rate products at two-year fixed prices, has really turned the mortgage market on its head.”

Montlake, director of Coreco mortgage brokers, said the deal could be a game changer.

He said: “Customers could really benefit from this new breed of lender.”

There are lower-priced products on the market – Yorkshire Building Society has a 0.99% rate, but this is fixed for only two years.

Atom’s new five-year deal significantly undercuts the opposition: the next cheapest five-year deal is offered by Leeds Building Society with a rate of 2.55%.

While there are early redemption charges with Atom’s new five-year deal, borrowers can overpay by 20% each year without being charged, and the mortgage is portable.

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Source:: Borrowing becomes cheaper than ever as lender slashes five-year mortgage deal to below 1.3%