Barclays launches ‘loyalty’ mortgages

by Mark Johnston

Barclays is following a number of high street lenders  like Halifax, Co-op, and the Spanish bank Santander in offering loyalty mortgages to its existing customers who hold current accounts with them.The Banks new range of loyalty mortgages will offer reductions of ocver 0.5% to customer who hold their primary banking with them. Primary banking is where a customer holds their main current account which has their salary or income paid into. Barclays currents accounts include a wide range such as their Premier, Additions and Graduate accounts which all qualify for the reduction off of tracker, fixed rate and offset mortgage products.

Andy Gray, head of mortgages for Barclays, called the new range a reward from Barclays to its customers. “These loyalty rates supplement the competitive mortgage deals available to new and existing customers from our standard range,” he said. “They also build on the drop-lock facility we launched last month which gives new tracker and offset customers the flexibility of a low tracker rate now, and the option to switch to a fixed rate-in the future when they need greater security, without incurring an early repayment charge.”

David Hollingworth of fee-free mortgage broker London & Country Mortgages said: “Loyalty deals certainly seems to be a growing trend and as the Barclays options only require £800 per month to be credited to the current account when some others want at least £1,000 to qualify, it looks pretty good.”

The offer currently includes a two year fixed rate mortgage at 2.95% for a 70% loan to value (LTV) mortgage. Those who do not currently bank  with Barclay’s would be paying 3.49%. A £250,000 25 year mortgage would normally cost £1,250 per month but with the discount the monthly payment would reduce to £1,184 resulting in almost a £70 saving each month.

The Co-op’s loyalty deal for current account customers is a tracker mortgage at 1.99% base rate for the life of the mortgage. In order to qualify for this deal, customer must have held a current account for two months with their salary being paid directly into it.

The Spanish banking giant Santander is offerings a 70% loan to value (LTV) mortgage at 3.09% which requires a £495 fee and the customer must have held one of their current accounts for six months with at least £1,000 being paid into it every month.

The Halifax is also joining in on the loyalty mortgage by offering at least 0.2% discount on a massive range of its mortgages but again customers must hold their rewards account before applying.

“The slight difference here is that the Halifax account can be opened concurrently with the mortgage application,” says Hollingworth. “In fact the Halifax website doesn’t show the rates that apply without a current account, presumably working on the assumption that you will want the reward account.”

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