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News: Natwest mortgage mischief

Thu, 26 Apr 07

A "mortgage challenge" offering homeowners the chance to scoop 1000 pounds is almost 'unattainable'...

Big five bank NatWest, part of the Royal Bank of Scotland group, is offering mortgage customers of Halifax, Abbey, Lloyds TSB and Woolwich the cash boost if it is unable to beat their current home loan. Mortgages must be for at least 50,000 pounds with loan-to-value of 75 percent or less.

The mortgage challenge is not open to those who are tied into their current deal, or have an Internet, buy-to-let, offset, current account or stepped rate mortgage.

But independent price comparison service Moneyfacts.co.uk said it was the "deal you can't get".

Mortgage analyst Julia Harris said it was "somewhat of an empty promise" as the mortgage that NatWest uses for comparison is unbeatable, based on the monthly repayments of the deals from the four lenders it aims to trump.

The monthly repayment comparison is made against NatWest's two-year base rate tracker at 5.14 percent.

"While it is great news to see NatWest encouraging borrowers to remortgage to a better deal, the 1,000 pound mortgage challenge is little more than a marketing ploy to entice borrowers through the door," said Harris.

"This is by far the largest price promise we have seen, and it is the only lender to currently offer such a challenge. But with so many caveats to the deal, it makes it a sure-fire win for NatWest".

Borrowers beware

However, she said the NatWest deal might not always prove the most competitive overall -- and that borrowers should take into account more than just the headline rate.

Switchers should consider the whole mortgage package, including the rate, fees, incentives and flexibility, she said.

However, a NatWest spokeswoman said the mortgage challenge had been designed to offer a better deal "to those who invariably will be rolling off on to higher rates or who are offered poor rates and don't realise that they have the option to do something about it -- or don't know how to".

She added: "If, as a result of our activity, other lenders revise their mortgage deals and offer their customers a better deal than is currently on offer, we'll be pleased to have been a catalyst for a change in their policy".

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