Leeds BS 

Leeds BS launches discount deals

Leeds BS launches discount deals

Leeds Building Society has launched three two-year discount mortgages starting at a headline rate of 0.99 per cent.

The mortgage with the lowest rate, at 0.99 per cent, comes with a 65 per cent loan-to value (LTV) and a £1,999 fee.

The other two mortgages include one with a headline rate of 1.47 per cent, a 65 per cent LTV and no fee, and one with a 1.79 per cent headline rate, an 85 per cent LTV and no fee.

Matt Bartle, head of product and pricing at Leeds Building Society, said the new discount mortgage would increase choice for borrowers.

He said: "Fixed rate remains the most popular type of mortgage by some margin, both among our customers and in the UK generally, but there’s a trade-off.

"The interest rate and monthly repayments may be a little higher than if the borrower had chosen a variable rate but they have the security of fixed repayments which can help them to budget."

He added: "Borrowers who aren’t expecting rate increases in the near future could choose a variable rate product with lower repayments, which is why we’re introducing these shorter-term discount mortgages."

But Steve Paterson, director at Teesside Money, said while headline rates on discount mortgages might be appealing at first glance, they don’t always represent the best deal for clients.

He said: "It’s more about lenders protecting themselves for the future. The Bank of England base rate has been low for years and I don’t think the banks are making much of profit. It they discount their standard variable rate, they are future-proofing themselves."

Mr Paterson said discount mortgages were the flavour of the month around a decade ago but a good broker would look into the total cost of credit for the client rather than let them be tempted by a headline rate.

He added that a two-year discount mortgage with a low headline rate and a high fee was likely to be poor value for money on the cheaper properties outside of the London market.