Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.


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.