Money Insider: Lenders offer great rates on new mortgages

The number of new mortgage deals has really picked up during the past couple of weeks, with many lenders falling over themselves to offer ultra- low rates and innovative options to tempt consumers into taking out a new deal.

Yorkshire Building Society stormed to the top of the best buy tables with its five-year fixed-rate of only 3.49 per cent (£995 fee) up to 75 per cent LTV. It's rare to see a five-year deal at less than 4 per cent, but a sub 3.5 per cent rate is almost unheard of.

Capped rate mortgages have also started to return, with the latest offering from First Direct looking a good deal. The three-year mortgage is priced at base plus 2.58 per cent, so the current pay rate of 3.08 per cent works out at 1.24 per cent lower than the average three-year fixed rate. With many people predicting no rate rises for at least 12 months, this is an option worth exploring further. If you're in the market for a variable rate product, Woolwich mortgages from Barclays has cut its rates for the sixth time this year, with the lifetime tracker just trimmed by a further 0.19 per cent to 3.19 per cent with £999 fee for advances up to 80 per cent LTV.

Chelsea Building Society – part of the Yorkshire – has just launched a fixed-rate mortgage with a difference, priced at 3.99 per cent (to 70 per cent LTV) with a £195 fee and £500 cash back. This deal is unique in that the borrower has the flexibility to choose the term they wish to fix for, at either five, six or seven years.

In a more stable economic environment, borrowers would be snapping up many of these new rates in a flash. However, because household budgets are being squeezed and the risk of unemployment remains a real concern, the low take-up of new home loans is not really surprising.

The subdued level of demand for new mortgages is also surprising when you consider that it is now cheaper to buy than to rent in most parts of the UK. The problem is this situation is unlikely to change in the short term. High deposit requirements and the need for a whiter-than-white credit record leaves many people with no option but to continue to line their landlord's pockets every month.

This week Yorkshire Building Society announced it is to acquire the mortgage and savings books of Egg Banking from Citigroup, with the deal expected to be approved and completed by the end of this year.

The move will see the UK's second biggest mutual take on an additional 550,000 customers, bringing with them £2.5bn of savings balances and £430m worth of mortgages.

The acquisition of this sizeable new savings book looks a smart move, particularly as the cost of funding remains an issue for many building societies. The deal will enhance Yorkshire's funding position and enable one of the most competitive mortgage providers in the UK to expand its lending activities to a much wider audience.

As well as this latest move, Yorkshire BS has already tied up with Chelsea BS and Barnsley BS and is currently awaiting approval for a merger with Norwich & Peterborough BS. The UK desperately needs increased competition among financial services providers as consumers look for a trusted brand to deliver on both rates and service.

It's been a rocky few years for building societies, but Yorkshire BS is proving that the sector still has plenty of fight left in it and that it has the vision and determination to be a serious player on our high streets.



Andrew Hagger is a money analyst at Moneynet.co.uk

Get the best deal for your holiday cash

The kids breaking up from school is a sure sign that the summer holiday season is moving into overdrive.

With the pound down more than 7 per cent against the euro year-on-year, it means that millions of holidaymakers heading to the most popular eurozone destinations of Spain and France this summer will find they get a lot less than they probably realised. A family of four exchanging £1,000 will get 90 euros less than this time last year, a sterling equivalent of £82.

I've mentioned previously how important it is to check the charges levied by your credit and debit card provider for your plastic transactions overseas, but it's also worth getting the best deal for your foreign cash too.

For one of the most competitive deals for your holiday cash, take a look at www.travelex.co.uk, where you can order online and benefit from a Price Promise which guarantees you the best price foreign currency in the UK, or the difference refunded.

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
News
news
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
New Articles
i100... with this review
PROMOTED VIDEO
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
Sport
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
i100
News
news
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
News
Blahnik says: 'I think I understand the English more than they do themselves'
people
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
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

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam