by Mark Johnston
Tesco Bank Cuts Mortgage Rates!
Tesco’s bank started to offer mortgages to consumers in August 2012 and since then they have advanced £258 million in secured mortgage lending.
According to the Council of Mortgage Lenders (CML) the lender is estimated to hold a 0.2 per cent market share with lending of around £0.3 billion.
Recent figures have revealed that the bank has increased its mortgage lending by 77 per cent in the 6 months from February to August 2013, meaning that its secured mortgage lending figure grew to £456.8 million in August this year.
Many financial experts have suggested that this growth has been largely due to the funding for lending scheme.
The bank of England has stated that according to its latest figures Tesco has drawn down £600 million from the scheme.
Tesco Bank has revealed it has increased its lending commitments by cutting rates by up to 0.5 per cent across its two and three year mortgage range.
A two year fixed rate deal with 80 per cent loan to value (LTV) ratio, has been cut from 3.59 per cent to just 3.09 per cent, a drop of 0.5 per cent. The deal has a £195 product fee.
Another two year fixed rate mortgage with a 85 per cent loan to value (LTV) ratio which comes with a £195 product fee has been cut from 3.69 per cent to 3.39 per cent, a drop of 0.3 per cent.
The supermarket giant is now also offering a two year fixed product at 70 per cent loan to value (LTV) with a rate of 1.99 per cent but this comes with a £1,300 product fee and also a £195 booking fee.
David McCreadie, managing director at Tesco Bank, said “the rate changes illustrate our commitment to continually offer customers a strong choice of products from a highly competitive range”.
While this rate looks good other lenders who are also operating in the sub 2 per cent market at 70 per cent loan to value (LTV) offer better rates such as Nationwide building society who offers a rate of 1.89 per cent to existing customers. The Post Office also offers a direct product with a rate of 1.98 per cent, although this is on a 75 per cent loan to value (LTV) ratio.
There is also a three year fixed rate mortgage with a 85 per cent loan to value (LTV) ratio at a rate of 3.39 per cent.
All products will then eventually move on to the Tesco Bank Standard Variable Rate which currently stands at 4.24 per cent at the end of the initial fixed rate period.
Borrowers can also apply for up to two payment holidays per year.
The lenders mortgage products also offer the flexibility to make regular or lump sum overpayments of up to 20 per cent of the outstanding balance each year during the initial rate period, without having to pay an early repayment charge.
All this said the lender has however raised its rates across all of its five year products with Tesco’s headline 70 per cent loan to value (LTV) product jumping from 2.79 per cent to 2.99 per cent.
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