The Co-operative Bank has reduced the rates on 20 mortgage products by up to 0.40%, making many of its deals market-leaders.
The Co-operative Bank has slashed the rates on its two-, three- and five-year fixed rate mortgages as well as its lifetime trackers.
A total of 20 products will fall in price from the 5th of October by up to 0.4%, and the Co-op says that 17 of these are now market leading.
So let’s take a look at what you can get and whether the Co-op’s claims hold any truth.
Two-year fixed rates under 4%
From the 5th of October buyers looking to fix for only two years can get these sub-4% deals from the Co-op:
|
Deal |
Rate |
Fee |
Max LTV |
|
Two-year fixed rate exclusive* |
2.99% |
£0 |
75% |
|
Two-year fixed rate |
3.29% |
£0 |
60% |
|
Two-year fixed rate |
3.49% |
£0 |
75% |
|
Two-year fixed rate |
3.59% |
£999 |
85% |
|
Two-year fixed rate exclusive* |
3.59% |
£0 |
85% |
|
Two-year fixed rate |
3.99% |
£0 |
85% |
*Only available to Co-operative Bank current account customers
As you can see the very best deals are reserved for existing current account holders. Those that bank with the Co-op can get a great 2.99% deal, fee free, with a 25% deposit saved up. Or for those with a smaller deposit of 15% - a rate of 3.59% is offered fee free on a loan-to-value of 85%.
But even if you’re not a customer the sub 4% rates across the range are remarkable. In my hunt for a mortgage I have found that a lot of two-year fixed rate deals at the moment, especially on LTVs of 85%, are hovering above the 4% mark.
HSBC for example has a two-year fixed special fee free deal at 4.29% on a LTV of 85%. So like for like the Co-op comes up top with a 3.99% deal for the same terms.
That said there are quite a few sub 4% two-year fixed rate deals out there if you have a larger deposit or are prepared to pay some hefty fees.
For example, Leeds Building Society has a 3.19% rate on an LTV of 75% which is 0.3% cheaper than Co-op, but comes with a £1,198 add on cost.
Other sub-4% two-year fixed rates
Here are a few examples of other sub-4% two-year fixed rate deals across a range of LTVs.
|
Lender |
Rate |
Fee |
Max LTV |
|
2.64% |
£1,999 |
60% |
|
|
2.85% |
£995 |
60% |
|
|
2.79% |
£995 |
75% |
|
|
3.09% |
£895 |
70% |
|
|
3.53% |
£1,198 |
80% |
|
|
3.84% |
£999 |
80% |
Five-year fixed rates cut by 0.4%
Now let's take a look at the five-year deals.
|
Deal |
Rate |
Fee |
Max LTV |
|
Five-year fixed rate exclusive* |
3.49% |
£0 |
75% |
|
Five-year fixed rate |
3.49% |
£999 |
75% |
|
Five-year fixed rate |
3.99% |
£999 |
85% |
|
Five-year fixed rate exclusive* |
3.99% |
£0 |
85% |
|
Five-year fixed rate |
4.39% |
£0 |
85% |
*Only available to Co-operative Bank current account customers
Again the best deals are reserved for current account customers. You can get the rate of 3.99% on an 85% LTV and the rate of 3.49% on a 75% LTV, both with no fee if you choose to or already bank with the Co-op.
Five-year fixed rate mortgages became a very competitive market earlier this year after HSBC launched its 2.99% rate back in July. For more read HSBC launches lowest five-year fixed rate mortgage ever. But the rate was only available to those with 40% deposits.
Needless to say Co-op’s five-year range can’t reach these lows because it is offering the deal on higher LTVs of between 75% and 85%. But at these LTVs they are certainly market leaders.
The closest challenger I could find on price was the Post Office, which offers a five-year fix at 3.59% with no fee on a 75% LTV. But this deal is still 0.1% shy of beating Co-op’s 3.49% rate.
For more long term rates take a look at: The best long-term fixed and tracker mortgages.
More five-year fixes for smaller deposits
|
Lender |
Rate |
Fee |
Max LTV |
|
3.64% |
£995 |
75% |
|
|
3.98% |
£995 |
75% |
|
|
3.99% |
£195 |
80% |
|
|
4.19% |
£1,198 |
80% |
|
|
4.19% |
£995 |
75% |
|
|
4.29% |
£999 |
80% |
|
|
4.49% |
£995 |
85% |
|
|
4.49% |
£0 |
80% |
|
|
4.54% |
£1,495 |
85% |
|
|
4.74% |
£498 |
90% |
|
|
4.89% |
£0 |
85% |
|
|
4.89% |
£599 |
90% |
Three-year fixed rates for small deposits
As part of the second stage of price drops a trio of three-year fixed rates will also be cut by 0.2% from Wednesday 10th October.
The deals will benefit those with smaller deposits.
Those with a 10% deposit will be able to apply for a leading rate of 4.59% that comes with a £999 fee. Or for buyers with a bit more to put down a rate of 4.39% fee free is available on an 85% LTV or a rate of 3.79% with a £999 fee.
Typically those with smaller deposits face higher rates which mean more expensive repayments.
For example Nottingham Building Society has a three-year fixed rate deal of 4.79% on an LTV of 90% that comes with no fee. The monthly repayments would be £858.63 on a £150,000 loan taken out over 25 years.
Co-op’s deal is 0.2% cheaper but comes with a £999 add-on cost. If you paid the fee separately the monthly repayments on the same terms would be over £17 cheaper at £841.43 a month. That’s a saving of £619.20 over the three-year deal.
More three year fixes for smaller deposits
|
Lender |
Rate |
Fee |
LTV |
|
3.99% |
£995 |
85% |
|
|
4.13% |
£1,198 |
85% |
|
|
4.49% |
£995 |
85% |
|
|
4.59% |
£995 |
85% |
|
|
4.79% |
£995 |
90% |
|
|
4.89% |
£599 |
90% |
|
|
4.89% |
£0 |
90% |
|
|
5.49% |
£995 |
90% |
|
|
5.58% |
£199 |
85-90% |
|
|
5.89% |
£0 |
90% |
*Only available to current account holders
Lifetime trackers for 2.89%
If you want to ride the wave of cheap tracker mortgages instead of fixing your repayments Co-op will also be launching a trio of lifetime trackers with rate reductions of up to 0.3% from Wednesday 10th of October.
The rates are only available to current account holders and include a rate of 2.89% on a 60% LTV, 3.49% up to 75% LTV and 3.89% up to 85% LTV, all fee free.
These rates appear less competitive with HSBC’s lifetime tracker at 2.64% on a LTV of 60% beating Co-op’s price. However, Co-op’s deal is fee free whereas HSBC is charging £999.
For a round-up of the best lifetime trackers available at the moment read: The best long-term fixed and tracker mortgages.
Shop around
Co-op’s price reduction is vast and can be confusing. Speaking to a mortgage advisor will help you find the best deal around at any given time for your needs. But whatever you do make sure you shop around and act quickly when you find a good offer as the very best rates aren’t likely to stick around for long.
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At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.
This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article.
Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term may revert to the lender's standard variable rate or a tracker rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.
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