Lloyds Bank has slashed rates across its exclusive Club Lloyds mortgage range, delivering what is now the cheapest two-year fixed deal on the market for borrowers with substantial deposits.
The bank’s flagship offering stands at 3.47 per cent for customers putting down at least 40 per cent, accompanied by a £999 arrangement fee.
For a £200,000 loan repaid over 25 years, this translates to monthly payments of £998.
These preferential rates are reserved exclusively for Club Lloyds current account holders, though applicants can secure a mortgage as soon as their account becomes active.
Without membership, the bank’s lowest available rate sits 0.1 percentage points higher at 3.57 per cent.
The deals are open to both first-time buyers and those moving home.
Borrowers with a 25 per cent deposit can currently access one of the cheapest deals on the market, with rates starting at 3.52 per cent. This option comes with a £999 fee and would cost £1,004 a month on a £200,000 mortgage over 25 years.
The next closest rival is Barclays, which is offering a 3.61 per cent rate with a lower £899 fee.
For buyers with a 15 per cent deposit, the best available rate is 3.65 per cent through Lloyds Bank via its Club Lloyds account.
This undercuts Halifax, which is offering a 3.75 per cent deal alongside a higher £1,099 fee.
Lloyds offers the cheapest mortgage deal on the market
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PAThe biggest shift has come at the 10 per cent deposit level, where Lloyds Bank is now leading the market. Its 3.96 per cent rate is cheaper than HSBC’s 4.02 per cent deal, although Lloyds charges a higher £999 fee compared with HSBC’s £749.
At this deposit level, monthly repayments would be £1,051 on a £200,000 loan over 25 years.
Customers who switch to a Club Lloyds account from another bank can also receive a £250 switching bonus. The offer runs until early February, with the payment made within 30 days of completing the switch.
The Club Lloyds current account carries a £5 monthly charge, though this is waived for those depositing £2,000 or more each month.
Britons can secure a sub 3.5% mortgage rate
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GETTYOne notable drawback is that borrowers must apply directly with Lloyds rather than through a mortgage broker.
Aaron Strutt of Trinity Financial notes that “the overwhelming majority of mortgages are submitted by brokers apart from when it is through a few lenders like Lloyds Bank, First Direct and the Yorkshire Building Society.”
He cautions that dealing directly with the bank typically means a lengthier process.
“Some mortgage lenders work so quickly now that I suspect it is possible for some borrowers to get a mortgage offer out before Lloyds has booked the mortgage appointment and gone through the current account opening process,” Strutt warns.
Despite this, he considers any rate below 3.5 per cent to represent excellent value in the current market.
Mr Strutt believes even lower rates could emerge
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GETTY / LLOYDSMr Strutt believes even lower rates could emerge, suggesting three per cent deals are not out of the question should the UK economy continue to falter and pressure mount on the Bank of England to stimulate growth.
Nicholas Mendes, mortgage technical manager at John Charcol, urges caution for those tempted to switch banks purely for preferential rates.
“I wouldn’t advise buyers to switch banks solely to chase a headline rate without first confirming eligibility, affordability and borrowing limits,” says Mendes.
Rachel Springall of Moneyfactscompare.co.uk emphasises that seeking independent advice remains essential, adding that those remortgaging should not assume their existing provider offers the best deal.