Leeds Building Society has offered the first Retirement Interest Only (RIO) mortgage with cashback and no product fee.

The new RIO mortgages with £500 cashback and no product fee are:

• 3.94 per cent two-year fixed rate, with a discounted rate for the following three years
• 3.99 per cent five-year fixed rate
• 4.24 per cent ten-year fixed rate.

Each is available up to 55 per cent LTV and comes with a free standard valuation.

Matt Bartle, director of products at Leeds Building Society, said: “RIO is still a new and very much developing market since coming into existence last year.

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“For that reason we continue to refine and build on our proposition as we learn more about the needs of this group of borrowers.”

A recent Freedom of Information request to the Financial Conduct Authority revealed that 660 RIO loans had been completed by lenders since March 2018.

Strict affordability rules attached to the loans, whereby joint applicants must be able to support the mortgage on a single income, have been blamed for the low uptake of deals.

Leeds Building Society accepts RIO applications from borrowers aged between 55 and 80.