Falls in mortgage rates over the past couple of years have left providers with little room to manoeuvre when it comes to competing on price. As a result, providers have come up with more innovative ways to attract customers.

One of the most popular methods appears to be adding an incentive package to a mortgage deal. Data from Moneyfacts.co.uk shows that the number of mortgage products offering a range of freebies has increased by over third in five years, illustrated by the table below.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:

“The incentive package has become one of the most popular weapons in a provider’s arsenal when it comes to attracting borrowers, with the number of deals offering some form of incentive increasing by 616 in just two years.

“Now that rates have reached record lows, providers are looking for new ways to compete and attract borrowers. The incentive package fulfils this goal by offering new customers an enticing range of delights, such as free legal fees, gift cards and even cash rebates.

“Incentive packages in particularly cash rebates are especially appealing to first-time buyers as they potentially lessen the burden on their savings, giving them more cash for the all-important deposit. However, any savvy borrower can work the incentive package to their advantage and minimise upfront costs by choosing the best deal they can.

“Several providers now offer multiple options within one range of products, which means borrowers can tailor their mortgage choice to their benefit. However, more choice can mean it’s more difficult to compare options and gauge the potential benefits of an incentive package, particularly if it includes free valuation and free legal fees, which vary greatly according to the property price and may not negate the cost of a higher rate or fee.

“Freebies are always appealing but borrowers shouldn’t choose a mortgage based on its incentive package alone. Instead, mortgage applicants would be wise to look at the product in its entirety to ensure that the best deal is obtained.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.