Tesco has cut its 80% loan-to-value two and five-year fixed rates, leaving a slight gap between its products and Skipton and Halifax, which are currently topping the best-buy tables.
Remortgage borrowers fixing for two years, with a 20% deposit, can access a fee-free product of 1.79%.
This compares to the 1.74% offered by Halifax, also fee-free. Those looking to fix for five years can opt for a 2.29% fee-free Tesco remortgage, which again sits safely behind the market leader Skipton, which offers a rate of 2.24% for the same product.
Simon Collins, technical director, John Charcol, said lenders wanted the safety of riding in packs, not wanting to pull away from the group too much, or fall too far behind. “If lenders are not prepared to make bold moves with rate cuts, 50 basis points for example, they should focus on criteria changes, to add more value to their product changes,” he said.
He added: “Margins are as tight as they can be, but on criteria, there is room within the five-year fixed rate market where policies could be loosened.”
Collins said five and five-and-a-half times income multiples would be welcomed for five-year products.
“In two years, not much is likely to change in someone’s life, but five years, you’d like to think that most people would be in a better position,” he said.
Tipton & Coseley Building Society were recently praised for launching high income multiple products through selected packagers, allowing up to six times income to support mortgage applications.