The Hinckley & Rugby Building Society has launched a new five-year fixed rate 95% LTV mortgage which sees the interest rate drop for the final two years of the fix.

The exclusive product, available via brokers in the First Complete and Pink networks, has been created to reflect the fall in LTV on a repayment mortgage. The networks became Hinckley & Rugby Privileged Partners at the end of 2016.

Carolyn Thornley-Yates, the Hinckley & Rugby head of intermediary sales, said: “It seemed a shame to us that people fixing for five years do not get to take advantage of capital reduction and the potential for house price appreciation like people on shorter term products do. This is particularly relevant at 95% LTV, as the incremental difference between that and 90% pricing is often much greater than, say, 85% and 90%.

“Shorter fixes give the opportunity to fix again at a better rate. So, we created this new mortgage to have that interest reduction built-in whilst still giving homebuyers the certainty that they know what their monthly repayments will be for the full five years.”

The new mortgage’s initial charge rate is a competitive 3.8% for the first three years and then 2.79% for years four and five. Fees are £199 on application and £800 on completion. There is a free valuation on properties worth up to £1 million.

As an example, for a loan amount of £150,000 over 25 years the monthly payment would drop from £775.28 in the first three years to £702.92 in the final two years of the fixed rate product.

Karen Hedges, First Complete and Pink’s mortgage manager, said: “This new, innovative product from Hinckley & Rugby will greatly appeal to borrowers, who not only want the peace of mind offered by a five-year fixed rate product, but are also looking for a guaranteed rate reduction in four to five years’ time.

“We’re extremely excited to be able to offer this exclusive product to the network and feel confident that both our brokers and their clients will greatly benefit from this offering.”