Tesco Bank keeps the pressure on rivals with new mortgage deals

There’s no let up in the quest for new mortgage business, even more so since the Funding for Lending Scheme came in to play.

This morning Tesco Bank announced details of some attractive new mortgage deals, including some very competitive fixed rate pricing for those with at least 40% equity.

The 2 year fix comes in at 1.74%, 3 years is priced at 2.29% and 5 years at 2.49% – all with fees of £1495 (£1300 product fee and £195 booking fee).

Looking at the five year fixed rate deal in a little more detail, it’s up against the 2.74% Norwich & Peterborough Building Society mortgage with a much smaller £295 fee.

On the basis of a 25 year term and a mortgage of £150,000 then the N&P deal is slightly cheaper over the 5 year fix, but for anything above £150k, then the low rate on the Tesco deal starts to make it a more viable proposition despite the larger fee.

The cost of home loans seems to be edging lower week by week but it’s interesting to see just how much the cost of borrowing has decreased if you look at the last six months.

Back in December the best 5 year fixed rate deal was 3.19% with a £499 fee – on a £250k mortgage this would have set you back £73159 over the 5 year term, whereas the latest 2.49% (£1495 fee) offer from Tesco Bank will set you back £68695 – a saving of over £4460 – almost £75 per month.

The rate cuts from lenders seem to be getting smaller and you wonder if we’re almost at the stage where rates are bottoming out – for those customers sitting on an SVR of 4% or more, now’s the time for a long hard look at some of the longer term fixed rates on offer.

As ever with the vast array of mortgage rate and fee combinations available it’s wise to employ the services of an independent mortgage professional to crunch the numbers and find the most suitable product for your particular circumstances.

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