Barclays launches 'loyalty' mortgages for existing customers

Published 01st Sep 2010

Bank follows Santander, Co-op/Britannia and Halifax in offering reduced interest rates to current account holders


Barclays is to launch a range of loyalty mortgages offering current account customers reductions of up to 0.54 percentage points off tracker, fixed rate and offset mortgages. From tomorrow, customers holding any Barclays current account, including the Premier, Additions and Graduate accounts, will be eligible for the special rates.

Deals include a two-year fixed-rate mortgage at 2.95% for up to 70% loan-to-value (LTV) – 0.54 percentage points below the standard offer For mortgages of up to 80% LTV, the Barclays loyalty rate is 4.19% – a discount of 0.19 percentage points.

The bank claims its customers will save £922 in the first two years of their mortgage based on an average mortgage advance of £135,000. For larger mortgages, for example a £500,000 advance, the savings could top £3,400. To qualify, mortgage applicants need to have an existing Barclays current account, with a minimum of £800 credited in each of the last three months, at the time they apply for the loan.

Andy Gray, head of mortgages for Barclays, called the new range a reward from Barclays to its customers. "These loyalty rates supplement the competitive mortgage deals available to new and existing customers from our standard range," he said. "They also build on the drop-lock facility we launched last month which gives new tracker and offset customers the flexibility of a low tracker rate now, and the option to switch to a fixed rate-in the future when they need greater security, without incurring an early repayment charge."

David Hollingworth of fee-free mortgage broker London & Country Mortgages said: "Loyalty deals certainly seems to be a growing trend and as the Barclays options only require £800 per month to be credited to the current account when some others want at least £1,000 to qualify, it looks pretty good."

Santander's loyalty mortgages include a two-year fixed-rate 70% LTV product with a rate of 3.09%, but it requires a £495 fee and the current account must have been held for six months and a minimum of £1,000 credited per month.

The Co-op/Britannia has a tracker deal, available only to those that already hold a current account, at 1.99% above base rate for life, at 75% LTV with no fee. The account must have been held for at least two months, with a salary paid directly into the account.

Halifax offers a range of different rates for those that have a rewards account, and the deals are generally at least 0.2% below the rate for someone without an account.

"The slight difference here is that the Halifax account can be opened concurrently with the mortgage application," says Hollingworth. "In fact the Halifax website doesn't show the rates that apply without a current account, presumably working on the assumption that you will want the reward account."

Source: ' Guardian '

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