Type: Tracker mortgage
Tracker term: Two years
Tracker rate: 2.89% above the Bank of England base rate
Payable rate: 3.39%
Minimum loan: £6,000
Maximum loan: Up to 75% of valuation subject to a maximum of £550,000
Income multiples: Based on affordability
Conditions: Capital repayments of up to 10% a year allowed without penalty in the tracker period subject to a £500 minimum
Arrangement fee: None
Redemption fee: 2% of the mortgage balance in the first two years
Introducer’s fee: Refer to lender
This two-year tracker has an initial pay rate of 3.39 per cent. It tracks at 2.89 per cent above the base rate and is available for loans up to 75 per cent of valuation within a £550,000 maximum.
Assessing how the deal will fit in to the market, London & Country mortgages head of oommunications David Hollingwoth says: “Abbey has a huge range of two- year trackers with a wide variety of rate, fee and incentive combinations. Those borrowers unperturbed by talk of rising interest rates are likely to eye the initially lower tracker rates.”
Hollingworth says that for a maximum loan-to-valuation of 75 per cent, the rate on this product is unlikely to set hearts racing. “It is aiming to appeal to those that want to avoid big arrangement fees. That would generally apply to those with smaller mortgages.”
Hollingworth says the deal carries little in the way of bells and whistles, with no incentive packages for homebuyers or remortgage borrowers. “Flexibility is the standard 10 per cent overpayment a year,which should be more than enough for most borrowers,” he says.
Turning to the negative aspects of the product Hollingworth says: “It is hard to get excited about this product and the rate is simply too far off the pace despite the lack of any fee.”
He adds that a host of deals in the two-year market can beat this deal with a small or no arrangement fee. “For example, Accord offers a rate of 1.99 per cent above Base with a £495 fee. There is also competition from lifetime trackers with Woolwich offering remortgage borrowers 2.79 per cent above base for life with no fee and free valuation and legal work.
“Disappointingly, homebuyers can access a better product from Santander’s direct channels. It offers a two-year tracker of 2.59 per cent above base with no fee, a free valuation and £250 cashback. But to be fair this is not available on remortgage which the Abbey deal is.”
Summing up, Hollingworth says: “Abbey is clearly a strong intermediary lender with a broad product spectrum and clear criteria, which perhaps this product doesn’t help to showcase.”
Suitability to market: Average
Competitiveness of rate: Poor
Adviser remuneration: Good