Andrew Hagger: Devil is in the detail of 'bargain' mortgage rates

Money Insider

There was more evidence this week that mortgage lenders are finally starting to pass on lower rates to borrowers.

Since the launch of its 1.99 per cent discounted deal at the beginning of this month, HSBC has seen a doubling of traffic to the mortgage section of its website. The rate is still available with reportedly seven out of ten applications currently being sanctioned.

Not to be outdone, high-street rival Woolwich this week came to the table with a one-year stepped tracker mortgage at just 1.98 per cent. However, before you go dashing off to sign up; there are a few terms and conditions to consider. The product, which is only available on mortgages of £200,000 or more, comes with a fee of £999 and a maximum 60 per cent loan-to-value limit.

At the end of the first year the rate reverts to Barclays Base Rate (currently 0.5 per cent) plus 2.49 per cent with an early repayment charge of 2 per cent of the balance payable until January 2013.

So, while the rate looks attractive with base rate at a historical low point, you will leave yourself vulnerable to any rate increases that may occur during the next three years.

Woolwich has also trimmed selected fixed rates by up to 0.4 per cent for those with a larger deposit, but there's a worrying trend of wider margins being charged on higher LTV mortgages.

For example, the new two-year fix from Woolwich, if you have a 30 per cent deposit, is charged at 3.99 per cent. Those with just 10 per cent less to put down will be charged 5.99 per cent, a huge 2 per cent premium.

With valuers reportedly erring on the side of caution, you could find yourself paying a lot more for your mortgage than you thought.

Savings latest

The fixed-rate savings market has been frenetic again this week and, although it was a blow for savers when West Bromwich Building Society pulled its range of market-leading deals, we have seen some competitively priced new products popping up in their place.

Yorkshire Building Society launched a table-topping 4.65 per cent, three-year fixed rate bond, which is available from just £100 and refreshingly isn't purely an online account, with telephone and branch applications both an option.

Aldermore is still top dog when it comes to a five-year fix at 5.4 per cent, but new accounts from Yorkshire Building Society at 5.3 per cent and Barclays at 5.25 per cent are now giving them a close run for their money.

It has been a bit of a mixed bag for variable rate savings, with Egg deciding to slash the bonus on its internet savings account by 0.75 per cent. As a result, new customers will receive just 2.5 per cent rather than the 3.25 per cent previously on offer.

On a brighter note Citi has launched the Citibank Flexible Saver paying 3.3 per cent AER from £1 although, as seems to be the norm these days, it includes a sizeable bonus element, in this case 2.25 per cent fixed for the first 12 months.

PROMOTED VIDEO
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
Arts and Entertainment
tv
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
News
i100
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Project Manager (HR)- Bristol - Upto £400 p/day

    £350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

    Graduate / Trainee Recruitment Consultant - IT

    £25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

    HR Business Partner - Banking Finance - Brentwood - £45K

    £45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

    PA / Team Secretary - Wimbledon

    £28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

    Day In a Page

    Save the tiger: The animals bred for bones on China’s tiger farms

    The animals bred for bones on China’s tiger farms

    The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
    A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

    A former custard factory, a Midlands bog and a Leeds cemetery

    Introducing the top 50 hidden spots in Britain
    Ebola epidemic: Plagued by fear

    Ebola epidemic: Plagued by fear

    How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
    Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

    From 'Parks and Recreation' to 'Guardians of the Galaxy'

    He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
    How live cinema screenings can boost arts audiences

    How live cinema screenings can boost arts audiences

    Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
    Shipping container hotels: Pop-up hotels filling a niche

    Pop-up hotels filling a niche

    Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
    Native American headdresses are not fashion accessories

    Feather dust-up

    A Canadian festival has banned Native American headwear. Haven't we been here before?
    Boris Johnson's war on diesel

    Boris Johnson's war on diesel

    11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
    5 best waterproof cameras

    Splash and flash: 5 best waterproof cameras

    Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
    Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

    Louis van Gaal interview

    Manchester United manager discusses tactics and rebuilding after the David Moyes era
    The children were playing in the street with toy guns. The air strikes were tragically real

    The air strikes were tragically real

    The children were playing in the street with toy guns
    Boozy, ignorant, intolerant, but very polite – The British, as others see us

    Britain as others see us

    Boozy, ignorant, intolerant, but very polite
    Countries that don’t survey their tigers risk losing them altogether

    Countries that don’t survey their tigers risk losing them

    Jonathon Porritt sounds the alarm
    How did our legends really begin?

    How did our legends really begin?

    Applying the theory of evolution to the world's many mythologies
    Watch out: Lambrusco is back on the menu

    Lambrusco is back on the menu

    Naff Seventies corner-shop staple is this year's Aperol Spritz