Tesco and first offer cheap mortgages

By Jeff Salway
Published on 20/10/2012 15:36

Tesco Bank and First Direct led the way yesterday as homeowners were boosted by a flurry of mortgage rate cuts – although the cheap deals are on offer only to those with large deposits.

The supermarket giant’s banking arm launched the cheapest mortgage in the UK by slashing one of its two-year fixed-rate deals to just 1.99 per cent.

The mortgage market newcomer has cut the cost of all its two-year fixed-rates at 60 and 70 per cent loan-to-value (LTV). However the 1.99 per cent mortgage, which has a fee of £995, is available only to those with a deposit or equity of 40 per cent.

HSBC-owned First Direct also unveiled cheaper mortgages yesterday. It launched a new five-year fixed mortgage with an interest rate of just 2.99 per cent, albeit with a booking fee of £1,999 per cent and with a minimum deposit of 35 per cent.