When Tesco launched its first range of mortgage products, it was met with a muted response from the media and claims that it was not competitive enough.
Since that initial launch on 6th August, Tesco Bank has really upped its game and the latest rate cuts announced today will give its high street rivals something to think about.
This is the third set of rate reductions in a little over six weeks, with the latest round on the back of the bank’s application to join the Funding for Lending Scheme (FLS).
The sub 2% rate for the 60% LTV two year fixed deal will be the deal that grabs all the headlines, with the rate cut by 0.65% and £300 shaved off the product fee, just ten days after it was originally launched.
The two year fix at 70% LTV is another deal worth mentioning – the rate on this product has been cut by 0.80% from 3.19% at launch to 2.39% today.
This 0.80% reduction for someone looking for a £150k mortgage (25 year term) will cut the monthly repayment cost by £61, down from £726 to £665 per month, amounting to a saving of £1464 over the two year term (the equivalent of more than two monthly repayments).
It’s excellent news for consumers that the FLS is driving mortgage costs down, however it’s disappointing that we’re not seeing more of this aggressive repricing at 80% LTV and above where it’s really needed.
With rates this low, it has to be a HIT