How the new Tesco mortgages stack upTuesday, 07 August 2012 10:27
Tesco has joined the mortgage market taking on some of the big lenders.
The brand is offering fixed-rate and tracker mortgages but we are yet to see how popular the new lending will be for consumers.
Michael Ossei, personal finance expert at uSwitch.com, has taken a closer look to see how the new Tesco mortgages stack up against the competition.
"Tesco Bank has finally shown its hand in the mortgage market, and looks like a major competitor in the banking world,” he said.
“But with competition already high and with lower rates available, it seems that Tesco has missed an opportunity to clinch the gold medal.”
The Tesco mortgage rate is 3.19 per cent for a two-year fixed-rate.
But this is much more than other lenders such as West Brom where the rate sits at 2.95 per cent and Leeds Building Society at 3.15 per cent.
"But, although the rates aren't market-leading, Tesco has one up on its opponents as a trusted household name, untainted by the distrust in the large high street banks,” he said.
“Tesco customers will be able to benefit from Clubcard points - Clubcard holders will be rewarded with points as they repay their mortgage, and will collect one point for every four pounds of monthly mortgage repayment.”
The Tesco mortgage may also be an option for those who are cash-strapped because it has a lower arrangement fee than competitors.
The hurdles remain for first-time buyers with the minimum deposit needed for a Tesco deal sitting at 20 per cent of the cost of the home.