Mortgage deals with a sting in the tail

Lenders are launching a range of new ten-year, fixed-rate mortgages, but the jury is out on whether they offer value for money. Piper Terrett investigates, and rounds up the rest of the week's personal finance news.

Lenders are launching a range of new ten-year, fixed-rate mortgages, but the jury is out on whether they offer value for money, says Teresa Hunter in The Daily Telegraph some have "a nasty sting in the tail". Santander's new ten-year mortgage, charging 3.94%, requires a 40% deposit and a £995 fee. Yet the best five-year deals peg interest costs at just 2.5%. A borrower with a £100,000 mortgage would pay £4,585 more in repayments in the first five years of Santander's loan than with Yorkshire Bank's 2.49% five-year deal, although Yorkshire's £1,999 arrangement fee is more costly. Early redemption fees are also punitive.

Tenants and landlords should check that any money they give letting agents is protected, writes Tanya Powley in FT Money. From this autumn, all letting and managing agents will have to belong to a scheme of redress that allows an independent party to rule on disputes between landlords and tenants over deposits. However, industry groups warn that rules are also needed to protect tenants (or landlords) against fraud. As Isobel Thomson of the National Approved Letting Scheme notes: "If an agent disappears with the contents of the client account, the ombudsman can't give you your money back." Letting agents are thought to handle about £14bn a year in rent and deposits. Consumers should choose agents who are members of industry bodies, such as the Association of Residential Letting Agents, which offer client money protection schemes to protect landlords' and tenants' cash.

The cost of living may have fallen, but savers still face a struggle to find an inflation-beating interest rate, says Hilary Osborne in The Guardian. The Consumer Prices Index inflation rate fell to 2.4% in April. To beat that, basic-ratetaxpayers must earn 3% in a tax-paying account, while higher-rate taxpayers need 3.99%. A survey of 861 such accounts by Moneyfacts found only one account paying 3% Virgin Money's five-year fixed-rate bond. Choice is also limited in the tax-free individual savings account (Isa) market. The best deals are Virgin Money's at 3%, Principality Building Society's five-year bond,paying 2.75%, and Coventry Building Society's two-year fix, paying 2.55%.

Recommended

Should you fix your mortgage? Interest rates have hit a five-year high
Mortgages

Should you fix your mortgage? Interest rates have hit a five-year high

Mortgage interest rates hit a five-year high last month. So should you fix your mortgage rate? And if so, how long should you fix for? Ruth Jackson in…
4 May 2022
Should you use your savings to overpay your mortgage?
Mortgages

Should you use your savings to overpay your mortgage?

Early mortgage repayments could be a better way to save in a low interest-rate environment, says Ruth Jackson-Kirby.
2 Mar 2022
How to keep your mortgage payments low as interest rates rise
Mortgages

How to keep your mortgage payments low as interest rates rise

Rising interest rates pose a threat to your mortgage, but it’s not all bad news. Here are some ways to secure a better rate.
11 Feb 2022
UK house prices hit a fresh record last month, but the market may be cooling off
House prices

UK house prices hit a fresh record last month, but the market may be cooling off

Average UK house prices rose in January shows Halifax data but there are signs that the market is cooling down. Saloni Sardana looks at why prices may…
7 Feb 2022

Most Popular

Get set for another debt binge as real interest rates fall
UK Economy

Get set for another debt binge as real interest rates fall

Despite the fuss about rising interest rates, they’re falling in real terms. That will blow up a wild bubble, says Matthew Lynn.
15 May 2022
High inflation will fade – here’s why
Inflation

High inflation will fade – here’s why

Many people expect high inflation to persist for a long time. But that might not be true, says Max King. Inflation may fall faster than expected – and…
13 May 2022
Is the oil market heading for a supply glut?
Oil

Is the oil market heading for a supply glut?

Many people assume that the high oil price is here to stay – and could well go higher. But we’ve been here before, says Max King. History suggests tha…
16 May 2022