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C&G launches FTB tracker below base

Cheltenham & Gloucester has launched a two-year tracker for first-time buyers which tracks at 0.01% below the Bank of England base rate.

The Low-Start tracker, currently 0.49%, is available for loans between £25,000 and £750,000 and at between 85% and 90% LTV.

But the tracking rate of 0.01% below base rate only lasts until December 31 2010, at which point the rate jumps to base rate plus 5.49% until July 31 2012.

Aaron Strutt, broker with Trinity Financial Group, says: “The rate is low now, but there is still quite a large chance that base rate might go up. Brokers just want some more normal rates, ideally for two-year fixes.”

The move follows the decision last week from Lloyds Banking Group, C&G’s parent company, to cap its interest-only mortgages at £500,000.

The lender has also changed its policy on what is considered an acceptable repayment vehicle for interest-only mortgages, with the sale of a house or business or an inheritance no longer permitted.

 

 

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  • Tim Lynch 18th May 2010 at 1:10 pm

    This has to be the most irresponsible product in the market!

    Highly likely that the pay rate could reach 8% during the two year tie in, which is way above all lenders client affordability rates.

    No wonder its ‘Direct Only’ as difficult to see a broker recommending this one!

  • michael wells 17th May 2010 at 7:45 pm

    What a load of headline grabbing tosh! Who cares if it’s direct only it’s a pants product. 100k 5yr c/r goes from 354.98 variable for 6m to 651.27 variable for the next 2 years.
    Designed purely for advertising purposes.

  • Avenue & Co Private Finance 17th May 2010 at 5:44 pm

    No one can predict rates but many FTB are cautious on their first purchase. If any individual were to read the APR on this deal, they will quickley realise that it belongs at the bottom of the pile.

    To even consider offering vulnerable First time buyers a ticking time bomb of a mortgage like this is a) Irresponsible and b) Cheap Tactics and c) An example of just how poor the advice is from banks.

    The only advantage to a borrower on this deal is the 90% LTV and paying a premium now to revert to C&G base rate in 2 yrs (but ONLY if C&G keep their SVR low, and this is a gamble.

    No doubt many will be tempted by this deal, and many won’t.

  • William Kingsley 17th May 2010 at 4:12 pm

    So it’s a 2 yr tracker with low payments for a few months – tell the client to budget for 5.99 and overpay for the initial months – it’ll reduce the loan by a decent amount – then they go onto the lowest svr in the market – I don’t think its a bad offer long term

  • Stephen Snell 17th May 2010 at 3:15 pm

    Dual pricing is alive and kicking. When they need us again, I do have a very long memory. No 1st timer should go near this product, a few months of low monthly payments followed by a hike to base rate plus 5.49%. Not a great deal.

  • Paul 17th May 2010 at 3:11 pm

    A classic example of why a client should visit a broker. A naive FTB walks into a branch of C&G and is sold the headline rate on a non advised basis by an adviser with no knowlege of the market outside of the 4 walls they can see. FTB happy with the great rate upon completion, for arguments sake in July 2010. First payment due in August meaning only 5 payments at the lower rate before a massive 5% increase. 19 month tie in to follow with any possible BBR increases to also be added in. No decent adviser would recommend this product, be much better served with a decent foxed rate. Non advised entrapment by another name.

  • Stephen Snell 17th May 2010 at 3:10 pm

    Dual pricing is alive and kicking. When they need us again, I do have a very long memory.

  • Paul 17th May 2010 at 2:54 pm

    A classic example of why a client should visit a broker. A naive FTB walks into a branch of C&G and is sold the headline rate on a non advised basis by an adviser with no knowlege of the market outside of the 4 walls they can see. FTB happy with the great rate upon completion, for arguments sake in July 2010. First payment due in August meaning only 5 payments at the lower rate before a massive 5% increase. 19 month tie in to follow with any possible BBR increases to also be added in. No decent adviser would recommend this product, be much better served with a decent foxed rate. Non advised entrapment by another name.

  • Chelt Glos 17th May 2010 at 12:39 pm

    You guessed…. only for Direct clients