Spotlight: Lloyds’ 1.99% tracker mortgage

The deal

Lloyds Banking Group has introduced a two-year tracker mortgage at 1.49 per cent above base rate.

The good points

With base rate stuck on 0.5 per cent, that means borrowers pay just 1.99 per cent. With experts predicting that a rate increase could be some way off, the low rate could effectively be locked in for months.

The bad points

There is a massive product fee of 3 per cent. It means anyone taking out a £150,000 mortgage will be charged a shockingly high £4,500. On top of that you'll need a deposit of at least 40 per cent to qualify for the deal. If you only have a 10 per cent deposit the rate soars to an unattractive 5.29 per cent above base rate.

Conclusion

Ignore the headline rate and check out the total cost. You'd be better off with an Alliance & Leicester tracker at 2.49 per cent, with a flat fee of £995. Anyone borrowing £150,000 would save £2,600 with the higher-rate A&L deal. Simon Read