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New 5% mortgage deals unveiled

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New 5% mortgage deals unveiled
Yorkshire Building Society is now offering the widest choice of five per cent mortgage deals of any UK lender


Published: 7:33am, 20th November 2013
Updated: 9:36pm, 20th November 2013

A major building society has unleashed a flood of new 5% mortgage deals on to the market which undercut products being offered by the Government's flagship Help to Buy Scheme.

Yorkshire Building Society Group's range of 36 two and five year fixed-rate products has raised the choice of 5% deposit deals on the market by 56%.

The deals are available through Yorkshire, Barnsley, Chelsea and Norwich and Peterborough Building Societies and the group's intermediary-only lending arm Accord Mortgages.

They are being offered to first-time buyers and home movers. Remortgage customers will also be able to take them out from 2014.

Yorkshire, which is the second largest building society in the UK, said it is now offering the widest choice of 5% deals of any UK lender.

The society said that as well as the products not needing any state backing, they do not require parents to put up any sort of guarantee.

It said recent consumer research it carried out suggests that a quarter (25%) of first-time buyers, home movers and remortgage customers would prefer to take out a mortgage in the "traditional" way direct from a lender rather than using Help to Buy.

The range includes fee-free deals and products with £500 cashback on completion. Customers can also choose to offset their mortgages, meaning their savings are linked to their mortgage and they pay less interest on what they owe.

The deals include a two-year fee-free deal with £500 cashback and a fixed rate of 4.89% for two years and a five-year fee-free deal with £500 cashback and a fixed rate of 5.29%.

There are also two-year fixed-rate deals in the new range at a lower rate of 4.69%, which come with an £845 fee.

A two-year fix at 4.59% from Chelsea Building Society is also included but borrowers need to bear in mind this comes with a £1,545 product fee. The Chelsea is also offering a five-year fix at 4.99% with a £1,545 fee.

Only a handful of products have been launched under the new Help to Buy scheme, which offers state-backed mortgages to people with deposits as low as 5%, although eventually lenders representing most of the mortgage market will take part.

So far, Royal Bank of Scotland (RBS) and NatWest are offering a fee-free two-year fix at 4.99% and a fee-free five-year fix at 5.49%, and Halifax and Bank of Scotland are offering a two-year fix at 5.19% with a £995 product fee.

Chris Pilling, chief executive of Yorkshire Building Society Group, said that the society is supportive of the intentions of the new Help to Buy scheme.

But he said: "We are delivering on the aims of this scheme without relying on Government support and offering even greater choice for borrowers."

The society, which has a 3.6% share of the mortgage market, has no plans to take part in Help to Buy as it believes its products already meet the scheme's intentions to help credit-worthy borrowers with low deposits.

Mr Pilling said the group has been encouraged to offer the new deals by signs that the housing market is recovering and property prices have stabilised.

He insisted the low-deposit deals will be handed out in a "responsible and prudent way" to make sure borrowers do not over-stretch themselves.

The mortgages will only be available on an advised basis to make sure that customers will be able to afford to pay back their loans.

According to financial information website Moneyfacts, there were 64 5% deposit deals on the market before Yorkshire's announcement.

There have been signs that while only a small number of products are available so far under the new phase of Help to Buy, the scheme is having a knock-on effect of ramping up competition among lenders outside the initiative.

In October, there were just 42 products available for people with 5% deposits, meaning the number of deals available had already jumped by more than 50% month-on-month before Yorkshire's new range was unveiled.

Moneyfacts spokeswoman Rachel Springall said: "It's good to see an increase in competition away from Help-to-buy for 95% loan-to-value deals.

"Furness Building Society is offering a five-year fixed deal priced at 4.75% for first and second time buyers which is fee-free, but it is restricted to customers who go into branch."

She continued: "These new deals will be a great addition for first-time buyers trying to get on the property ladder.

"They wipe out the need of a guarantor and will be attractive to borrowers who want to utilise traditional lending and not part of the Help to Buy scheme.

"As borrowers should weigh up the overall cost of a mortgage deal, the fact these new offers range from those with a cashback option with free valuation, or fee free or offset means potential customers are less likely to focus on the headline rate alone."

Mortgage applications worth £365 million have been received in the first month that the new Help to Buy scheme has been running.

A combination of Government initiatives and the Bank of England base rate remaining at a historic 0.5% low for more than four and-a-half years have boosted competition among lenders and kept borrowers' monthly mortgage payments relatively affordable despite stagnant wages and high living costs.

Concerns have also recently been raised about how long borrowers will be able to continue benefiting from these low mortgage payments after a report by the Bank last week suggested that an earlier-than-expected rise in interest rates could be on the horizon.

Data provided by moneysupermarket Best Buy Credit Cards - For Balance Transfers
The data displayed on this table was correct when published at 09:02 20/10/2014
Credit card provider Balance
Transfer
Purchases Representative
APR (Variable)
Card provider - Barclaycard

Barclaycard

Platinum Credit Card with Extended Balance Transfer

0.00%
34 months
2.99% fee
0.00%
6 months
18.90%

Representative Example:

If you spend £1200.00 at a purchase interest rate of 18.90% (variable) your Representative APR will be 18.90% (variable).

Apply

Card provider - Barclaycard

Barclaycard

Platinum Credit Card with Balance Transfer

0.00%
33 months
2.79% fee
0.00%
6 months
18.90%

Representative Example:

If you spend £1200.00 at a purchase interest rate of 18.90% (variable) your Representative APR will be 18.90% (variable).

Apply

Card provider - Halifax

Halifax

Balance Transfer Credit Card

0.00%
33 months
2.80% fee
0.00%
6 months
18.90%

Representative Example:

If you spend £1200.00 at a purchase interest rate of 18.95% (variable) your Representative APR will be 18.90% (variable).

Apply

Data provided by moneysupermarket Best Buy Savings Accounts - For Easy Access
The data displayed on this table was correct when published at 09:02 20/10/2014
Savings account provider Interest
Rate (AER)
Min Investment Notice
Savings provider - Coventry Building Society

Coventry Building Society

PostSave Easy Access (2)

1.4% 500 none

Eligibility criteria:

Available to UK residents aged 16 or over.

Apply

Savings provider - Tesco Bank

Tesco Bank

Internet Saver

1.35% 1 none

Eligibility criteria:

Available to UK residents aged 18 or over.

Apply

Savings provider - Virgin Money

Virgin Money

Virgin Easy Access E-Saver Issue 12

1.3% 1 none

Eligibility criteria:

Apply

Savings provider - West Brom Building Society

West Brom Building Society

WeBSaveR 2

1.2% 1000 none

Eligibility criteria:

Apply

Data provided by moneysupermarket Best Buy Current Accounts - For Rewards
The data displayed on this table was correct when published at 09:02 20/10/2014
Current account provider Reward Overdraft
Rate (EAR)
Current account provider - first direct

first direct

1st Account

£100 cashback when you switch 15.90

Apply

Current account provider - Santander

Santander

123 Current Account

Up to 3% cashback on household bills 0.00

Apply

Current account provider - Halifax

Halifax

Reward Current Account

Up to £160 in the 1st year 0.00

Apply

Data provided by moneysupermarket Best Buy Loans
The data displayed on this table was correct when published at 09:02 20/10/2014
Loan provider Headline Rate Payment per month Total charge for credit Total amount you repay
Loans provider - The Loans Engine

The Loans Engine

4.60% £297.50 £709.82 £10709.82

Representative Example:

If you borrow £10000.00 over 3 years at a Representative APR of 4.60% fixed and an annual interest rate of 4.60% you would pay the above.

Apply

Loans provider - Fluent Money

Fluent Money

4.70% £297.92 £725.26 £10725.26

Representative Example:

If you borrow £10000.00 over 3 years at a Representative APR of 4.70% fixed and an annual interest rate of 4.70% you would pay the above.

Apply

Loans provider - Ocean Finance

Ocean Finance

12.30% £330.51 £1898.20 £11898.20

Representative Example:

If you borrow £10000.00 over 3 years at a Representative APR of 12.30% fixed and an annual interest rate of 12.30% you would pay the above.

Apply

Data provided by moneysupermarket Best Buy Mortgages - For Remortgage
The data displayed on this table was correct when published at 09:02 20/10/2014
Mortgage provider Interest
Rate (AER)
Max LTV Duration
Mortgage provider - Norwich & Peterborough Building Society Tracker 65% LTV

Norwich & Peterborough Building Society Tracker 65% LTV

1.44% 65% For 2 years

Apply

Mortgage provider - Woolwich from Barclays Tracker 75% LTV

Woolwich from Barclays Tracker 75% LTV

1.49% 75% For 2 years

Apply

Mortgage provider - Tesco Bank Tracker 60% LTV

Tesco Bank Tracker 60% LTV

1.50% 60% Until 30/11/2016

Apply

Mortgage provider - first direct Tracker 65% LTV

first direct Tracker 65% LTV

1.59% 65% For 2 years

Apply

Mortgage provider - first direct Fixed 65% LTV

first direct Fixed 65% LTV

1.59% 65% For 2 years

Apply

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