by Mark Johnston
Tesco Slashes Mortgage Rates.
When Tesco Bank announced details of its first ever range of mortgage products in August 2012 it sems that they were met with a rather lukewarm response with many giving them the thumbs down as the rates were deemed to be uncompetitive in comparision.
However, the country’s biggest supermarket chain has recently announced mortgage rate reductions less than a month after entering the mortgage market.
Ray Boulger, of broker John Charcol, said Tesco’s decision to cut its rates is “not entirely surprising. The supermarket bank ‘has clearly done less business than anticipated and is reacting in the only logical way to drum up volume”.
James Cotton, of broker London & Country Mortgages, meanwhile, said ”Tesco was a bit conservative with its first launch but now they’ve had a period of bedding in they are clearly trying to move up the best buy tables a bit”.
Tesco Bank is reducing the rates on four of its fixed rate and tracker mortgage products, whether customers are remortgaging or buying a new home.
The rate on the five year fix to 70 per cent loan to value (LTV) has been slashed by 0.5 per cent from 3.89 per cent to just 3.39 per cent with a £995 fee. Its three-year fixed rate, also at the same loan to value (LTV) has been slashed by 0.41 per cent from 3.69 per cent to 3.28 per cent.
While Tesco’s two-year fix has been cut by 0.20 per cent to 2.99 per cent and this gives Northern Rock’s two year fix at 2.89 per cent with a £995 fee and Barclays two year fix at at 3.09 per cent with a fee of £999 fee something new to think about.
The mortgages are still however only available direct via its UK based customer service team online or via the phone.
Some experts feel that people were probably expecting to see this aggressive pricing on launch, but they feel that Tesco wanted to be 100 per cent confident of its systems and processes and being able to cope with the increase in applications that a move of this ilk is likely to deliver.
Therefore it appears that the rate changes once again underline Tesco Bank’s commitment to offering highly competitive banking products which meet the customers’ needs.
Prolific Mortgage Finance managing director Lea Karasavvas says that “some lenders are taking their foot off the gas in terms of product pricing it was refreshing to see Tesco becoming more aggressive”.
In conclusion more competition in the mortgage market from a big high street name is always good news for consumers. Although Sylvia Waycot, of price comparison website Moneyfacts, said that “while any cut in mortgage rate is to be applauded ‘this latest cut from Tesco falls short of those currently in the best buy tables”.
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