Money Insider: Chelsea ramps up mortgage battle for supremacy
Saturday 04 February 2012
Over the last few years, building societies have been a dominant force in the mortgage market, particularly with fixed-rate products. Even though mutuals already have a big presence in the bestbuy tables, the battle for mortgage supremacy stepped up another gear this week when Yorkshire Building Society, through its Chelsea brand, hit the market with a five-year fix at a record low rate of just 3.19 per cent, maximum 70 per cent loan-to-value (LTV) ratio.
While the eye-catching interest rate may send a shiver down the spine of some of its competitors, there is a slight sting in the tail in that the ultralow rate comes with a chunky product fee of £1,495.
Having crunched the numbers (based on a 25-year mortgage term), the new Chelsea five-year fix is the top deal as long as you want to borrow more than £117,000. Anything below this figure then you’re better off with the Co-operative Bank’s current 3.59 per cent five-year fixed rate (to 75 per cent LTV) with no product fee.
The low rate from Chelsea BS emphasises the importance of establishing the true cost of any mortgage deal (rate AND fee) and factoring in the term of your home loan.
To give you an idea of cost difference, if you’re looking to borrow £150,000, the Chelsea BS deal including the big fee will cost you £45,069 over the five-year term, some £423 cheaper than the Co-op Bank fee-free mortgage at 3.59 per cent.
The larger the amount borrowed, the less important the fee becomes, so on a mortgage of £300,000 for example, the Chelsea deal works out £1,222 cheaper over five years.
If you’re unsure which mortgage to plump for, seek the help of a mortgage professional and get them to do the sums on your behalf.
Competition is driving down mortgages to levels not seen before, but don’t be swayed by a headline rate as it may not be best deal for you.
Consumer confusion over bank switch plans
The crusade to force banks to make the task of switching your current account a simpler, faster and smoother process has been gathering pace over the last 18 months, but latest reports suggest that consumers simply don't understand what improvements are in the pipeline for 2013.
A report out today from First Direct claims that 87 per cent of people are unaware or confused about the changes being brought in to improve current account switching services and make it easier for them to change banks.
With more than 40 per cent of people never having switched their account, there are concerns that the current level of confusion could see switching levels stagnate, despite the best efforts of the industry to make drastic improvements.
It's important that people understand the positive changes, including a seven-day time limit for switching a current account, the payment of compensation to inconvenienced customers and the introduction of an automatic redirection service for standing orders and direct debits.
Without this extra confidence in the process, we'll be left with the same scenario where nearly a quarter of people are dissatisfied with the service received from their current account provider, but prefer to grudgingly put up with it rather than endure what they believe to be an arduous process and one fraught with problems.
Bond rivals fight it out
The launch of new, fixed-rate bonds from FirstSave this week will help maintain the positive momentum in the one and two-year markets.
At 3.6 per cent gross, the one-year, fixed-rate bond will see FirstSave fighting it out for top spot with AA Savings and Shawbrook Bank, both already offering a rate at the same level.
The 4 per cent, two-year rate is impressive too, although BM Savings will still edge the prime spot in the best buys at 4.05 per cent gross.
This time last year the best one-year rate was 3.25 per cent and the best two-year rate 3.65 per cent.
Andrew Hagger, Moneynet.co.uk
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Newcastle winger is in Argentina having chemotherapy
Returning to the stage after 20 years makes actress feel 'nauseous'
Man's attempt to avoid being impounded heavily criticised
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Grandmas keep accidentally tagging themselves as Grandmaster Flash on Facebook
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
Portuguese academic says British are 'filthy, violent and drunk'
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
iJobs Money & Business
£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...
£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...
£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony