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

When will interest rates go up?
UK Economy

When will interest rates go up?

Interest rates are already at 4.5%, but will the Bank of England keep hiking to control inflation?
16 May 2023
Millions of households face a mortgage hike of £2,300 a year
Mortgages

Millions of households face a mortgage hike of £2,300 a year

Around 3.75 million households are yet to feel the impact of rising mortgage rates because they are still on cheap fixed deals
15 May 2023
Is now a good time to buy a house?
Property

Is now a good time to buy a house?

Is now a good time to buy a house? That’s something many people might be asking as house prices, and mortgage rates, begin to decline.
10 May 2023
Skipton launches a 100% mortgage – how does it compare
Mortgages

Skipton launches a 100% mortgage – how does it compare

Skipton Building Society has launched the UK's first 100% loan-to-value mortgage exclusively available to renters. Similar deals are already available…
9 May 2023

Most Popular

June’s NS&I Premium Bond prize draw - are you this month’s millionaire?
Savings

June’s NS&I Premium Bond prize draw - are you this month’s millionaire?

Two fortunate NS&I Premium Bond winners are now millionaires. Find out here if you’re one of them.
1 Jun 2023
The best one-year fixed savings accounts - June 2023
Savings

The best one-year fixed savings accounts - June 2023

You can now earn 5% on 1 year fixed savings accounts - the best rate seen in 14 years. We have all the latest rates available now.
2 Jun 2023
The top healthcare funds to buy
Investments

The top healthcare funds to buy

Increasingly rapid progress in drugs and healthcare technology makes these trusts top tips, says Max King.
1 Jun 2023