Tesco shakes up mortgage market

Last updated: Oct 23rd, 2012
News by Holly Black
Mortgage contract

Tesco Bank has launched one of the cheapest mortgage deals ever with a rate of just 1.99%.

The two-year deal is fixed until the end of 2014 and is a product of the government's "Funding for Lending" scheme, through which the high street giant has pledged to lend £1 billion in the next year.
 
But, for borrowers intending to rush out and grab this deal while they still can, there is a catch: it is only available to those with a 40% deposit and is subject to fees of £995.

This latest offer is a reduction of 0.65% on its previous best fixed-rate deal and comes with the benefit of Clubcard points on payments and overpayments.
 
Leeds Building Society is the only other lender to have offered a rate of 1.99%, that was last year but the fee was a hefty £1,995.

Money saver

The mortgage market is still not providing any relief to first-time buyers looking to get a foot on the ladder, but for those who are interested in remortgaging and have the cash to fund the product fee this could be a real money saver.

For those with just a 10% deposit the best two-year fixed-rate deal is more than double at 4.2% from Market Harborough Building Society, with an application fee of £395.

For an 80% loan-to-value mortgage the rates improve; Halifax is the best two-year fixed deal here currently at 2.44% but with a heavy £1,995 application fee.

This article was taken from our sister website, Money Observer.