This Tuesday, the Yorkshire group of building societies – the Yorkshire Building Society, Chelsea Building Society and Barnsley Building Society – announced that the rates on some of their tracker mortgages were increasing by 10-20 basis points, followed by news that Northern Rock was also increasing the costs of many of its fixed-rate mortgage deals.

However, the Co-op Bank announced yesterday that it will be reducing the costs of its five-year fixed-rate mortgages by up to 90 basis points. Basis points are equivalent to 1/100th of 1 per cent, and are used to calculate changes in interest rates on mortgage deals.

The reductions by Co-op translate into a new 3.39 per cent fixed rate for five years for mortgages worth 75 per cent of a property’s value, although these deals also come with a £999 fee. Nevertheless it is the equal of the best value deals on the market – such as the 3.39 per cent five-year fixed rate mortgage with a £995 fee from the Yorkshire Building Society – and gives potential mortgage-holders with a 25 per cent deposit far more choice.

It becomes an even better deal for anyone seeking to remortgage their property as the package comes with free legal costs and a free property valuation. Anyone with a Co-op current account will be able to access the competitive interest rate without the fee, as part of a standard “loyalty” incentive.

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