Tesco Bank cuts rates on range by up to 0.5%

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Tesco Bank last week reduced the rates on its range of mortgage products by up to 0.5 per cent.

Its three-year fixed rate at 70 per cent has been reduced by 0.41 per cent from 3.69 per cent when it first launched to 3.28 per cent and its five-year fixed rate at the same LTV has gone from 3.89 per cent to 3.39 per cent.

Its 70 per cent two-year fixed rate was 3.19 per cent – this has now been slashed to 2.99 per cent.

Its two-year tracker has been reduced from a headline rate of 3.39 per cent to 2.95 per cent.

The mortgages are only available direct via its UK-based customer service team online or via the phone. When it first launched, Tesco Bank managing director David McCreadie told Mortgage Strategy that there were no plans to offer products through brokers. He also said there were no plans to offer anything above 80 per cent LTV.

He says: “We are pleased to offer customers some good news by reducing our rates to as low as 2.95 per cent.

“Today’s rate changes once again underline Tesco Bank’s commitment to offering highly competitive banking products which meet our customers’ needs today and as they continue to bank with us into the future.”

Prolific Mortgage Finance managing director Lea Karasavvas says some lenders taking their foot off the gas in terms of product pricing and it was refreshing to see Tesco becoming more aggressive.

He says: “It has not taken a long for them to start building momentum and this step should hopefully keep the pressure on others to keep the price wars we are enjoying at present running.

“While access to brokers is prohibited on these deals, it is the bigger picture we must focus on and we remain hopeful that this move will influence the many lenders to keep margins low and improve their own ranges.”