Tesco to spark price war

Robyn Hall

October 19, 2012

Chief executive Benny Higgins unveiled what he called “market-leading rates” after announcing that Tesco was accessing the Bank of England’s Funding For Lending Scheme.

Tesco Bank has reduced its 2-year fixed rate to 1.99% – the third set of rate reductions in six weeks.

The 2-year fixed rate at 70% LTV has also been reduced by 0.80% from 3.19% at launch to 2.39% today.

Benny Higgins, chief executive officer of Tesco, said: “We welcome the Funding for Lending Scheme and are delighted to be able to pass on the benefit to our customers.

“We are committed to responsible lending and hope to enable our customers to borrow a further £1 billion, over the next year, at affordable rates.”

When Tesco launched its mortgage range this summer it was criticised for its uncompetitive rates.

Andrew Hagger, money expert at Moneycomms.co.uk, said Tesco’s latest cuts will make other lenders take notice.

He said: “Since that initial launch on 6th August, Tesco Bank has really upped its game and the latest rate cuts announced today will give its high street rivals something to think about.

“It’s excellent news for consumers that the FLS is driving mortgage costs down, however it’s disappointing that we’re not seeing more of this aggressive re-pricing at 80% LTV and above where it’s really needed.”

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