Darlington Building Society has launched a reversionary rate to help borrowers coming to the end of their initial period with affordability.
The reversionary rate applies from 1 August and, at 6.59%, is lower than the mutual’s standard variable rate (SVR) of 8.09%.
Now, borrowers will roll onto the reversionary rate for up to three years after the initial incentive period of their mortgage product instead of moving onto the SVR.
Darlington Building Society said this would potentially improve affordability and mortgage accessibility for prospective borrowers.
This comes as data from Moneyfacts suggests the average SVR is now 8.15%, notably higher than the average two-year fixed rate of 5.77% and the average five-year fixed rate of 5.38%.
Lower monthly repayments for borrowers
Chris Blewitt (pictured), head of mortgages for Darlington Building Society, said: “As interest rates fluctuate, affordability models require review to ensure that they adequately reflect the market. Aspiring homeowners have felt the pinch in recent months, and it’s up to lenders to put measures into place to support all borrowers.
“Our refreshed affordability criteria adds a layer of proportionality to the marketplace so that homemovers can afford to take the next step, first-time buyers can sensibly afford to get onto the property ladder, and the wider housing market maintains crucial flexibility.”
He added: “The reversionary rate not only helps people to get on the ladder as it opens up their prospects and affordability, but it also means that when new and existing borrowers come to the end of their initial incentive period, they benefit from lower monthly repayments than if they had rolled straight onto an SVR.
“We know people are hesitant to move right now, with people holding out for changes with the Bank of England base rate and how it impacts the housing market. It’s our hope that this new stepped approach will help to reassure buyers across the board.”
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
