The best new mortgage deals

What are the best new mortgage deals available? Christina Jordan compares the market-leaders.

In the current mortgage environment any new products are very welcome, especially if the rates are keen. And Lloyds TSB claims its new range of fixed rate mortgages is market-leading, so it's worth taking a good look at what is has to offer.

New deals

The lender (which operates under the Cheltenham & Gloucester brand in England and Lloyds TSB in Scotland) has launched six new fixed rate mortgages. It does, of course have a much larger existing range of mortgages, including trackers and other options.

This week's new deals include four two-year fixed rates and two five-year fixed rates.

The most noticeable thing about them is that four out of the six new products are only available up to 60% loan-to-value -- in other words you need at least a 40% deposit or equity in your home in order to qualify for the mortgages.

Clearly they are aimed at remortgagors with plenty of equity and not at the typical first-time buyer. One of the new products is available up to 75% LTV for those with a still significant deposit, but none are accessible to anyone with less than 25% upfront.

It's a shame that Lloyds couldn't launch at least one new 'market-leading' deal to those with 10% deposit, but this is indicative of the current market, where competitive deals are only available to a select few, and first-time buyers are still left paying high rates. Also, to be fair, Lloyds does offer mortgages up to 90% of the property's value in its existing range.

But back to the new deals.

Two-year fixed rates

Still one of the most popular types of mortgage for UK borrowers, two-year fixed rates offer you security of payment without forcing you to lock into a rate for the long term.

The headline rate from Lloyds TSB is a very appealing 3.29%, for house purchasers only (i.e. not remortgagors), and is available up to 60% LTV. But it comes with an eye-watering fee of 2.5% of the mortgage amount. This would be a fee of £5,000 on a £200,000 mortgage! Even those with a modest £100,000 homeloan would still need to cough up £2,500.

For those who want to pay less in fees (most of us) Lloyds TSB offers two more options.

Its new two-year fixed rate at 3.79% comes with a fee of £995, again available up to 60% LTV.

Or you can choose to pay just £495 in fees and the rate jumps to 3.89%.

Finally, for those with just 25% upfront the lender has launched a 3.99% two-year fix with a £995 fee.

But are these four deals market leading? Well, I'm afraid not.

Better options?

At 60% LTV HSBC offers a two-year fixed rate at just 2.89% with a fee of £1,499. This is a still a steep fee, but not as steep as the Lloyds TSB deal, and the rate is much lower.

For those who want to pay a smaller fee, First Direct's two-year fixed rate is just 2.99% with a fee of £898, and it's actually available to borrowers with just 25% upfront.

In addition, Chelsea Building Society has a 3.39% two-year fixed rate with a fee of £995 available up to 65% LTV.

And it doesn't stop there. Below are a few more deals I believe equal or beat the new Lloyds TSB two-year fixed rates:

Five-year deals

With the Base Rate at such a low level (0.5%), longer-term fixed rates are beginning to look very attractive indeed. They offer borrowers the chance to protect themselves from rising rates for five years for example -- during which time it's probable that rates will have increased significantly. In addition, by locking into a five-year fix you save on remortgage costs two years down the line.

Lloyds TSB has launched two new five-year fixed rates, both available to those with a 40% deposit. The first has a rate of 4.89% and a fee of £995. Or you can choose a lower fee of £495 and the rate rises to 4.99%.

Locking in under five per cent is an appealing option and historically represents a good deal, particularly when you remember that Base Rate was 5% or higher for most of last year.

But there are better deals on offer.

Shop around

The cheapest five-year fixed rate is HSBC's 3.99% deal up to 60% LTV, and the mortgage comes with a reasonable fee of £999.

After that the Post Office has a great offer for those who need to borrow 75% of the property's value. The rate is fixed for five years at 4.15% and comes with a cheap fee of £599.

Chelsea Building Society's five-year fix at 4.19% is also well worth a look. Available up to 65% LTV it comes with a fee of £995.

In addition to these three great deals, below are some other five-year fixes that pip Lloyds TSB to the post in my view:

Compare mortgages at lovemoney.com

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