Too good to be true? Tesco Bank pulls 1.99% fixed rate
Less than a month after its launch, Tesco Bank has withdrawn its 1.99 per cent two-year fixed mortgage rate.
The rate, which launched on 19 October, had previously been available direct to customers with a maximum loan to value (LTV) of 60 per cent. Yet, due to an “extremely positive response”, the allocated funds for the deal have now been used up.
Tesco Bank entered the mortgage market in August this year; a move which many saw as a strong step forward in injecting some much needed competition within the market - the proverbial cat amongst the pigeons if you will. It launched a number of two, three and five year fixed rates as well as two-trackers, all with a maximum LTV of 80 per cent, before slashing rates in both September and October.
At the end of October, it was announced that Tesco Bank was one of 17 lenders to join the Government’s Funding for Lending Scheme, for which it deemed responsible for the launch of its 1.99 per cent low rate.
However there is some level of concern from mortgage brokers regarding Tesco’s direct-only approach and, in particular, for those customers who, having been lured in by this undoubtedly attractive low rate, could be in line for a nasty payment shock when they come to the end of their two year fixed term.
This once again opens up the age-old question; advice or no advice?
Content correct at time of publication