Money Insider: Lending drive is delivering red-hot offers

 

Mortgage lenders are falling over themselves to feature in the best buy tables, and with the help of the Bank of England's Funding for Lending Scheme are now offering some head-turning deals.

With First Direct launching a five-year fixed rate at 2.99 per cent and Tesco Bank a two-year fixed mortgage at 1.99 per cent in the past week, there's a growing case for moving away from your current lender's Standard Variable Rate and locking into one of these low-rate home loans.

Unfortunately these hot mortgage products are only available to borrowers with a sizeable stake to put down, and in the case of First Direct's 2.99 per cent deal you can borrow only 65 per cent of the property value.

Even though the First Direct mortgage has a hefty-looking fee of £1,999, because it is spread over five years and the rate has come down from 3.79 per cent the mortgage still works out £2,336 cheaper over five years, or £39 a month, for someone with a 25-year, £150,000 mortgage.

It's not just the established lenders offering these more competitive mortgages; some of the new providers are weighing in with some aggressive price cuts too.

When Tesco launched its first range of mortgage products, it was met with a muted response from the media amid claims that it was not competitive enough with the established players.

Since its debut in the mortgage market on 6 August, the supermarket bank has really raised its game and the latest rate cuts will give its high street rivals something to think about.

This is the third set of rate reductions in a little over six weeks, with the latest round on the back of the Tesco bank's application to join the Funding for Lending Scheme.

The sub-2 per cent rate for the 60 per cent LTV two-year fixed deal is the mortgage that will grab all the headlines, with the rate cut by 0.65 per cent and £300 shaved off the product fee just ten days after it was originally launched.

The two-year fix at 70 per cent LTV is another deal worth mentioning – the rate on this product has been cut by 0.8 per cent from 3.19 per cent at launch to 2.39 per cent today.

This 0.8 per cent reduction for someone looking for a £150,000 mortgage (25-year term) will cut the monthly repayment cost by £61, from £726 to £665 a month, amounting to a saving of £1,464 over the two-year term – the equivalent of more than two monthly repayments.

It's excellent news for consumers that the Bank of England's scheme is driving mortgage costs down, but it's also disappointing that we are not seeing more of this frenzied activity at 80 per cent LTV and above, where it would really have an impact.

Forget the zero heroes for your credit card

The balance transfer segment of the credit card market continues to get the most coverage and dominate the best buys, but more suitable, good value long-term alternatives are being missed by consumers.

If you're looking for a new credit card, all the adverts and newspaper best buys will point you towards the longest 0 per cent deals on the market. While interest-free plastic can save you a small fortune in interest costs if used wisely, there are also some very solid all round credit cards on the market that rarely get a mention due to the blinkered focus on zero per cent balance transfers. You can get 22 months-plus terms on free credit on balance transfers, but rates when the introductory deal ends can be almost 20 per cent APR.

If you take advantage of the 0 per cent period then move on to another card and repeat the process it makes financial sense, but for a card for the longer term there are alternatives with a much lower rate. Halifax Clarity (12.9 per cent APR), MBNA Everyday (11.9 per cent ), Nationwide BS Select (12.9 per cent ) and Sainsbury's Bank Gold (9.9 per cent) won't top the best buys, but offer a long-term interest rate well below the market average 18 per cent.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Sport
Karen Dunbar performs
Entertainers showcase local wit, talent and irrepressible spirit
Sport
Members of the Scotland deleagtion walk past during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
PROMOTED VIDEO
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
i100
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
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

    PMO Analyst - London - Banking - £350 - £400

    £350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

    Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

    £300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

    Insight Analyst – Permanent – Up to £40k – North London

    £35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

    Test Lead - London - Investment Banking

    £475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

    Day In a Page

    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
    US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

    Meet the US Army's shooting star

    Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
    Climate change threatens to make the antarctic fur seal extinct

    Take a good look while you can

    How climate change could wipe out this seal
    Should emergency hospital weddings be made easier for the terminally ill?

    Farewell, my lovely

    Should emergency hospital weddings be made easier?
    Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

    Crowdfunded novel nominated for Booker Prize

    Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
    Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

    Vladimir Putin employs a full-time food taster

    John Walsh salutes those brave souls who have, throughout history, put their knives on the line
    Tour de France effect brings Hollywood blockbusters to Yorkshire

    Tour de France effect brings Hollywood blockbusters to Yorkshire

    A $25m thriller starring Sam Worthington to be made in God's Own Country
    Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

    Will The Minerva Project change the face of higher learning?

    The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
    The 10 best pedicure products

    Feet treat: 10 best pedicure products

    Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
    Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

    Commonwealth Games 2014

    Great Scots! Planes and pipers welcome in Glasgow's Games
    Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

    Jack Pitt-Brooke

    Manchester City and Patrick Vieira make the right stand on racism
    How Terry Newton tragedy made iron men seek help to tackle their psychological demons

    How Newton tragedy made iron men seek help to tackle their psychological demons

    Over a hundred rugby league players have contacted clinic to deal with mental challenges of game