The flexi fixed for term range lets borrowers fix the rate paid on their mortgage for their loan term, which can be between 11 and 40 years.
The range is available for new purchases and remortgage, with new purchases available up to 95 per cent loan to value (LTV) and remortgage available up to 85 per cent LTV.
Rates start from 2.83 per cent at 60 per cent LTV for a 15-year term. For a 25 and 30-year term at 60 per cent LTV, rates begin from 2.85 per cent and 2.9 per cent respectively.
For 25 and 30-year terms at 95 per cent LTV rates start from 3.71 per cent and 3.77 per cent respectively.
Affordability is calculated on the fixed interest rate, rather than standard variable rate, which may allow customers to borrow more. Kensington said this could benefit first-time buyers or those looking for more expensive property.
The mortgage is portable and can be transferred to a new property and has free legals and no product fees. A 0.75 per cent proc fee will be paid to brokers, which covers mortgage clubs and networks.
No early repayment charges apply for moving or selling homes, critical illness or death. Overpayments of 10 per cent per year are permitted and customers can get a further advance after 12 months subject to affordability.
The firm had previously hinted at its plans for a long-term fixed rate launch, with Kensington Mortgages’ new business director Craig McKinlay saying it was planning to enter the space and that those products would improve affordability for first-time buyers.
Mark Arnold (pictured), chief executive of Kensington Mortgages, said over the last 12 years there have been ultra-low interest rates but that looked set to change with successive interest rate rises on the horizon.
He said that a fixed for term mortgage, which was popular in Europe, was “likely to become increasingly attractive in a rate rising environment”.
He added: “No two people or their circumstances are the same. Whether you’re a first-time buyer or homeowner wanting an affordability boost, a self-employed worker worried about remortgaging, or someone wanting greater certainty on monthly repayments – our new flexi fixed for term can help. With one fixed monthly payment until the mortgage ends, extra borrowing power, and added flexibility for any life events that may happen, it is that simple.”
Arnold said that a long-term fixed rate may not be suitable for everyone, which is why the product has increased flexibility, but that it was a “serious alternative for getting people onto the property ladder who otherwise would be excluded”.
Prateek Sharma, chief investment officer at Rothesay, said: “As the UK’s largest specialist pensions insurer, Rothesay is well-positioned to support these long-term loans which have an important role to play in the market.
“We are always looking for innovative ways to invest in long-term, secured and high quality assets, and firmly believe that these mortgages can provide the certainty that many borrowers are looking for. Through our partnership with Kensington, we’re pleased to support the Government’s ambition to make new types of mortgage products available which are purposefully designed to help increase home ownership while providing long-term security.”
Economic secretary to the Treasury John Glen said: “I am delighted to see new products like this, and am always pleased to see innovation in the mortgage market in the UK.
“Greater product choice creates more competition and more options for consumers, in this case particularly those who value certainty in their repayments over a longer period of time.”
Long-term fixed rates have previously not had significant take-up in the UK, with figures from UK Finance showing that fixed rates over 10 years represented less than one per cent of total lending for most months since 2015. However, new products have come to market with Habito launching a 40-year fixed rate mortgage earlier this year.
