Now you can pick up a 25 year debt with your groceries
After much anticipation from some people without much else to do, Tesco bank have finally unveiled their first mortgage offerings. And they are pretty underwhelming.
Largely fixed rates, their best rate is 3.19% fixed for two years, with a 70% max LTV, although higher rates are available with a deposit down to a minimum of 20%.
While 3.19% isn’t a bad rate, it is far from market leading, with high street names like HSBC already offering 2.99% fixes for five years. Ray Boulger of mortgage brokers John Charcol chuntered "any hopes that the entry of Tesco would produce a significant increase in competition have been dashed, at least initially, by its opening rates, which seem to be designed more to avoid getting too much business than to ruffle the feathers of existing lenders.”
"Its opening rates would have been competitive a month ago but not now, unless Tesco has re-defined the word competitive," he grumbled.
The big USP for Tescos is the fact that you can get Clubcard points on your payments, and you even get your Clubcard points (4 points per £) on all repayments you make, not just on the interest. You are also allowed to make up to 20% of the outstanding balance repayments each year without penalty, and those get Clubcard points too.
However, assuming a mortgage repayment of £1000 per month, that would earn you 250 Clubcard points a month, or 3000 Clubcard points a year. Given that 1 point equals 1p, we are not sure that £750 of Clubcard rewards over 25 years is a desperately exciting incentive. But we could be wrong.
Still, being able to go hundreds of thousands of pounds in debt while buying nappies and milk is what this country has been crying out for, no?