The cheapest mortgage in Britain: Tesco launches 1.99% mortgage - but you need a hefty 40% deposit
Tesco will today launch Britain’s cheapest mortgage, slashing its rates to as low as 1.99 per cent and effectively starting a price war in the mortgage market.
The new range of mortgages includes a market-leading two year fixed-rate plan at 1.99 per cent, down from 2.64 per cent, although borrowers need a hefty 40% deposit to take out the deal.
Tesco has also dropped the rate on another a two-year fix from 2.79% to 2.39% for borrowers with a 30% deposit and said it was able to make the rate cuts due to its plans to use a Government scheme to kick-start lending by offering banks access to cheap funding.
Both the Tesco deals also carry fees of £995 and are available to customers who are remortgaging or buying a new home.
Rachel Springall, spokeswoman for comparison website Moneyfacts, said the last time a similar fixed deal was offered at 1.99% was around a year ago.
She said: “It's great to see Tesco Bank offering some attractive rates, especially breaking the 2% barrier.
“The new two-year fixed deal from Tesco Bank will become the market leader at 1.99% with a £995 fee and will require a 40% deposit. In addition the two-year 2.39% deal with a £995 fee will be the lowest rate for 30% deposits.
“Customers will be able to acquire Clubcard points on each monthly repayment, where they can redeem them as vouchers to use in Tesco stores.”
The supermarket giant only launched into the mortgage market in August, and offers loans-to-value (LTVs) at up to 80%, alongside a range of banking and insurance products, with plans to launch cash Isas before the next tax year starts.
Mortgage availability has generally increased since the Bank of England and the Treasury launched the £80 billion funding for lending scheme at the start of August, although many headline-grabbing rates have been concentrated around people with larger deposits and have also come with significant fees.
Lenders have also toughened their borrowing criteria, meaning people have higher hurdles to jump to take out a mortgage.
The Council of Mortgage Lenders said yesterday that mortgage lending was 10% down in September compared with the previous month, which appeared to reflect a drop in the number of people looking to buy homes, while remortgaging levels also remain weak.
The Bank of England has suggested it could be towards the end of the year before the effects of recent improvements to lenders' ranges show up in any mortgage lending figures, due to the typical lag of two to four months between mortgage approvals and sales taking place.
Benny Higgins, chief executive of Tesco Bank, said: “We are committed to responsible lending and hope to enable our customers to borrow a further £1 billion, over the next year, at affordable rates.”
- 1 Bankers could face jail after report urges the Government to introduce new criminal offence for reckless management
- 2 Breaking the Silence: In the reality of occupation, there are no Palestinian civilians – only potential terrorists
- 3 Richard Nieuwenhuizen death: Six teenagers and 50-year-old father convicted of manslaughter in shocking case of referee killed over a game of football
- 4 Exclusive: Newcastle's star talent-spotter on brink as Joe Kinnear sparks walkout
- 5 Vast methane 'plumes' seen in Arctic ocean as sea ice retreats
iJobs Money & Business
£500 - £600 per day: Orgtel: FX Options Front Office Java / C# Developer - Ba...
£600 - £700 per day: Orgtel: Project Manager - Front Office - Regulatory IT C...
£600 - £750 per day: Orgtel: FATCA Project Manager - Banking - London - £600-...
£550 - £600 per day: Orgtel: Fidessa Analyst / PM - Banking - London - Up to £...
Day In a Page
A three-bedroom semi-detached house in Lower Slaughter constructed out of natural stone in keeping with the Cotswolds, £650,000
A smartly presented two-bedroom cottage, extensively refurbished with sun-filled garden and terrace, £350,000
A Victorian barn conversion at Heath End Farm with four bedrooms. £1.25 million.
A spacious two-bedroom flat within an impressive Victorian terrace building, close to Fulham Road and New Kings Road, £375,000.
A two-bedroom flat at Grafton Court, a former manor house in the village of Temple Grafton, with private terrace, £450,000
A four-bedroom listed mews in Apley Castle with impressive drawing room, £425,000
A two-bedroom flat close to the Regent's Canal with a private patio and a concierge service. £500,000
A two-bedroom flat at the Candlemakers Apartments set over two floors with a balcony. £625,000.
This three-bedroom Grade II-listed thatch in the pretty village of Wigginton. £450,000.
A new two-bedroom flat with a bright open-plan reception and skyline views. £450,000.
A modern home of almost 1,000sq ft is close to Stoke Newington's high street. £499,950
A five-bedroom bungalow in Hoveton with riverside garden and mooring dock, £550,000
A refurbished one-bedroom flat with south-facing reception and high ceilings. £579,950
A four-bedroom Grade II-listed house in Nazeing with large gardens. £550,000
A modern four-bedroom house in a converted stable within walking distance to Peckham Rye. £695,000
Three-bedroom house in a quiet residential area within close distance to Battersea Park. £450,000
A three-bedroom cottage within commuting distance of London, Norwich and Cambridge. £250,000
A two-bedroom cottage with a sun room and gardens in South Chard. £350,000.
A three-bedroom semi-detached house with original features including fireplaces and wooden flooring. £399,950