Amendments to Yorkshire Building Society's mortgage range now makes its two-year fix a best-buy on the market.
The society's two-year fixed rate mortgage (65% LTV) has been recently reduced to 1.66%, with a lower combined product / processing fee of £975.
This now undercuts competition from major banks in this headline category.
The Rate / Fee Negotiation
Currently, in the mortgage market, stunning headline rates are being undermined by high fees, which make the mortgages less competitive than other deals.
The example we used in our recent guide was Norwich & Peterborough, where, despite a higher initial interest rate than its competitors (1.99%), the lower fee of just £295 produced a better deal for those borrowing up to around £275,000.
Only when it came to loans above this amount could the lower interest rate eventually offset the larger arrangement fee.
Yorkshire's astute move is carefully calculated on these grounds.
By combining a lower rate (1.66%) with a lower fee (£975), the Yorkshire deal now becomes cheaper than rivals over the two-year offer period for loans above £178,000.
Below, we can see the cost of leading two-year fixes over the offer period (including the arrangement fee) at loan denominations of £100,000.
9th August 2013
| HSBC (1.49) (£1,999) | Chelsea BS (1.64) (£1,545) | YBS (1.66) (£1,345) | N&P (1.99) (£295) | |
| £100K |
£11,586 |
£11,302 |
£11,125 |
£10,456 |
| £200K |
£21,173 |
£21.059 |
£20,905 |
£20,617 |
| £300K |
£30,761 |
£30,816 |
£30,685 |
£30,777 |
| £400K |
£40,348 |
£40,574 |
£40,465 |
£40,938 |
| £500K |
£49,935 |
£50,331 |
£50,245 |
£51,099 |
16th August 2013
| HSBC (1.49) (£1,999) | Chelsea BS (1.64) (£1,545) | YBS (1.66) (£975) | N&P (1.99) (£295) | |
| £100K |
£11,586 |
£11,302 |
£10,755 |
£10,456 |
| £200K |
£21,173 |
£21.059 |
£20,535 |
£20,617 |
| £300K |
£30,761 |
£30,816 |
£30,315 |
£30,777 |
| £400K |
£40,348 |
£40,574 |
£40,095 |
£40,938 |
| £500K |
£49,935 |
£50,331 |
£49,875 |
£51,099 |
Previously, there had been only a small bracket where Yorkshire's headline deal proved most competitive. But with a few readjustments, the mortgage now tops HSBC, the West Bromich and Chelsea BS for buyers seeking homes valued above £274,000.
That's how much of a difference the fee can make. Check out Yorkshire's mortgage listings here, and our guide to arrangement fees for more details.
James Booker
Which4U
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