Spotlight On: First Direct's 5-year fixed rate mortgage

The deal

The online bank owned by HSBC yesterday launched a five-year, fixed-rate mortgage at 2.99 per cent.

Good points

Fixing at 2.99 for the next five years looks attractive, even if mortgage rates stay low for the next five years.

Bad points

The booking fee – it's a whopping £1,999! This from the lender that pioneered the £99 fee last year is quite shocking. Also, the deal is only available if you have at least a 35 per cent deposit, which will rule out new borrowers and many movers or remortgagers.

Conclusion

This is yet another example of a great headline rate maybe hiding an expensive deal. You won't know whether it's a good deal until you've done your sums. Lenders should scrap confusing fees and have a rate that's easy to compare.