Mortgages  

TSB bids for market share with lower-rate mortgages

TSB has reduced rates across its range of three-, five- and 10-year residential mortgages and introduced a new loan-to-value ratio for three-year fixes.

A new higher LTV range of 85 to 90 per cent has been made available for three-year fixes with an interest rate of 4.14 per cent, and £995 product fee.

In addition, a 0.10 percentage point reduction has been made across TSB’s range of five-year fixes.

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A reduced rate of 2.89 per cent is applicable to five-year fixes between 75 and 80 per cent LTV with a £995 product fee. The rate for the fee-free option is 3.04 per cent.

At 80 to 85 per cent LTV, the rate is 3.34 per cent, with a £995 product fee, and 0.15 percentage points more for the fee-free option.

In addition, 10-year fixes up to 60 per cent and between 60 and 75 per cent have been lowered by 0.20 percentage points to 3.14 and 3.39 per cent respectively.

Loans at 75 per cent to 80 per cent LTV are now available at 3.74 per cent, and 4.19 per cent at 80 to 85 per cent LTV.

TSB has also cut rates both for homebuyers and for people looking to remortgage on its Fix and Flex 10-year fixed-rate mortgage. Homebuyers looking for a mortgage of up to 75 per cent LTV will benefit from a 0.20 percentage reduction.

New discounted rates include a three-year fix at 2.44 per cent at 75 to 80 per cent LTV with a £995 product fee, and 10-year fixes at 4.29 per cent at 80 to 85 per cent LTV fee-free.

Provider view

Ian Ramsden, mortgage director at TSB, said: “By making mortgage repayments more affordable, TSB is helping people across Britain get a better deal, whether they are buying a new home or remortgaging their current one.”

Adviser view

Paul Williams, director at Denbighshire-based Commodore Finance, said: “What we are seeing in the current market is tremendous competition. More often than not, lenders offer attractive rates but customers often get battered with the arrangement and booking fee. A £995 product fee is pretty standard at the moment.

“Remortgage deals are becoming increasingly competitive as more lenders attempt to capture market share. Lenders have become much stricter when it comes to criteria, particularly regarding what they will and will not accept as income. There is now also more emphasis on affordability, which is welcome.”

Charges

Ranges from £0-£995.

Verdict

The mortgage market is currently highly competitive. Lenders are cutting rates on products – most notably fixes – in a bid to attract new custom ahead of the pending rise in interest rates.

While a £995 product fee has become standard in the market, more and more providers are offering a fee-free option – albeit with a higher rate of interest. The suitability of a fee-free product of course depends on individual circumstances.

Lenders adopting a stricter criteria and application process are two of the major developments in the market following the MMR. A greater emphasis on affordability is welcome, but many advisers have cried foul of mortgage applications being refused.