The lender said its Freestyle flexible deal with a rate reducer feature is the first of its kind in the UK and is expected to save borrowers more than £35,000 over the life of a typical 25-year mortgage. This is done by reducing the rate four times in the first five years, when capital is at its largest.
Speaking about the product, Standard Life Bank’s head of intermediary development Alan Dring was optimistic that clients would see the advantages the product had to offer.
“Although this may not be for everyone our aim is to reward customer loyalty with price reductions. Our product reverses the current mortgage table based on the trend to remortgage and gives the client and adviser a distinct long-term choice previously lacking in the market.”
Thomas Reeh, chief executive of the Black & White Group, said he is keen to see what attention the package will get.
“This is quite a different product. It will certainly fly in the face of conventional or popular press who still promote the two-year deep discount model.
“I suspect that conventional wisdom will meet this product coolly – but the reality is that most customers don’t want to switch mortgage provider every two years,” he said.
However, Ray Boulger, senior technical manager at John Charcol, was less optimistic. “Although the idea is good, the pricing is bad. It’s a start for lenders in attempting to improve client retention but in the current mortgage market the deal does not seem worthwhile.”
“If the start rate was more reasonably priced and if at the end of the deal you ended up paying less than the rates already available then the
product would be a lot more appealing,” Boulger added.
He went on to say that there is also nothing to stop the lender increasing or decreasing its SVR. “As a result customers run the risk of an increased gap between the SVR and Base Rate, a tactic that various lenders, including Standard Life Bank, have used before,” Boulger warned.
Alan Dring said the Bank’s intentions are to keep the SVR as static as possible but that the product must stay in line with the rest of the industry.
