The West Bromwich Building Society has laid down the gauntlet to rivals by reducing a number of its 2-year fixed-rate mortgages at higher loan-to-value levels.
The society, which has featured regularly in our mortgage reviews, has reduced its 2-year fixed rate mortgage at 85% LTV to just 2.79% and its 90% LTV rate to just 3.64%.
Both mortgages have a modest fee of £499 and a free valuation worth £525, while remortgage customers will also benefit from free legal fees.
At 2.79%, the 85% LTV mortgage compares favourably to big-name competitors.
Though the Post Office marginally undercuts it at 2.78%, the larger fee of £1,495 makes the West Bromwich deal far more attractive.
Stiffer competition is more likely to come from local lenders. The Hanley Economic Building Society matches the West Bromwich deal on rate and even slightly undercuts it on fees (£350), while house purchase customers receive £250 cashback on competition.
The Coventry Building Society is also sporting an attractive 85% mortgage at 2.75%, with a fee of £999.
Both of these are variable rate deals, however, which will make them less competitive if there is a rise in the Bank of England base rate during the mortgage term. By contrast, West Bromwich customers have the advantage of security against rate increases for the first two years.
Find out more about fixed rate vs. variable rate mortgages here.
The 90% deal also rates highly among big-name competitors. At 3.64%, it comes with a fee of £499 but a free standard valuation worth up to £525.
Once again, the Post Office offers a cheaper deal at 3.48%, but this comes at a hefty cost of £1,495. This will only outperform the new West Bromwich deal if the mortgage is large enough that the savings made from the lower rate can offset the extra thousand pounds in fees over the two-year term.
A cheaper rate is also on offer from HSBC at this loan-to-value range (3.59%), but the fee of £1,499 is unlikely to threaten the West Bromwich mortgage on overall cost. Home buyers with an HSBC current account can save £500 on the booking fee for many of its most competitive deals, however.
| 90% LTV Mortgage |
Mortgage |
Rate |
Fee |
Cost per Year of £150K Mortgage |
| West Bromwich Building Society |
3-Year Discounted Variable |
3.64 |
£499 | £9,396 |
| HSBC |
2-Year High Street Special |
3.59 |
£1,499 |
£9,848 |
| HSBC |
2-Year Current Account |
3.59 |
£999 |
£9,593 |
| Post Office |
2-Year Fixed |
3.48 |
£1,495 |
£9,721 |
| Monmouthshire Building Society |
3-Year Discount Variable |
3.29 |
£999 |
£9,309 |
Find out more about working out the best deal accounting for rate and fees.
Once again, in terms of overall cost the stiffest competition is likely to emerge from local lenders. West Brom’s 90% mortgage is surpassed convincingly by the Monmouthshire Building Society’s discount variable rate mortgage (3.25%), but this is limited to postcode areas in Wales and south-west England.
You can view the latest deals from the West Bromwich Building Society here.
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