Tesco shakes up mortgage market

Published by Holly Black on 19 October 2012.
Last updated on 23 October 2012

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.

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