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first direct interest rate changes

05 Mar 2003

Further to the base rate cut announced by the Bank of England last month, first direct has the following interest rate changes to its current account, savings accounts and mortgages.

All new rates take effect from today, Wednesday 5th March 2003.

Current accounts

Bank Account
Balances Previous Interest Rate New Interest Rate
£1 - £100,000 + 2.10% 2.00%

The rate on first direct ’s Bank Account is only reducing by 0.10% - considerably less than the 0.25% base rate cut - and customers continue to receive 2% credit interest.

Savings accounts

Everyday Savings Account1
Balances Previous Interest Rate New Interest Rate
£1 - £499 1.00% 0.85%
£500 - £2,499 1.15% 0.90%
£2,500 + 1.30% 1.05%
Savings Account2
Balances Previous Interest Rate New Interest Rate
£1 - £2,499 2.70% 2.50%
£2,500 - £4,999 2.70% 2.55%
£5,000 - £49,999 2.85% 2.60%
£50,000 - £99,999 3.00% 2.75%
£100,000 + 3.45% 3.20%
Bonus Savings Account (including the 1.25% monthly bonus)
Balances Previous Interest Rate New Interest Rate
£3,000 - £49,999 3.85% 3.60%
£50,000 - £99,999 4.00% 3.75%
£100,000 - £249,999 4.10% 3.80%
£250,000 - £500,000 4.20% 3.85%

The vast majority of first direct ’s savings customers will see a reduction of less than the base rate cut in their savings rates. For customers with higher balances (over £50,000) in the Bonus Savings Account, their savings are still earning a rate equal to or higher than base rate, even after these changes.

Mortgages

first direct announced last month that it is reducing its smartmortgage and CAT standard mortgage rates by 0.15% to 4.60%. For a customer with a mortgage of £100,000, this reduction will mean that on average they save over £8 a month, or £2,580 over the 25 year term of their loan. More importantly, this reduction makes first direct ’s smartmortgage the cheapest offset mortgage (with a current account facility) available in the market.

Mortgage interest rates of first direct and other lenders
Mortgage Lender % reduced by New rate
Egg 0.15% 4.59%
first direct smartmortgage* 0.15% 4.60%
HSBC 0.15% 4.60%
Openplan* 0.25% 4.60%
Sainsbury’s 0.25% 4.70%
Nationwide 0.10% 4.74%
Intelligent Finance* 0.10% 4.75%
One Account (Virgin)* 0.25% 4.05%
Halifax 0.10% 5.65%
Northern Rock 0.16% 5.69%
Cheltenham & Gloucester 0.20% 5.75%
Abbey National 0.15% 5.79%
Alliance & Leicester 0.16% 5.79%
Woolwich 0.16% 5.79%
Yorkshire Bank* 0.15% 5.09%

*offset mortgage with a current account facility.

N.B Standard variable rates quoted throughout for new borrower, borrowing 80% of the property value (80% LTV)

Alan Hughes, first direct ’s Chief Executive, said: “I’m delighted that the recent base rate change means our smartmortgage offers even better value. We believe it’s now impossible to beat if you want an offset home loan.

“For our savers, low interest rates can be bad news, so we’ve worked hard to protect the majority of our savings customers from the full impact of the base rate cut.”

1Everyday Savings Account provides a cash card for ATM withdrawals and monthly statements.
2Savings Account provides annual statements; no cash card facility.

ENDS

Notes to Editors:

Example savings with smartmortgage rate @ 4.60%:
£100,000 capital repayment mortgage Previous rate of 4.75% (4.9% APR) New rate of 4.60% (4.7% APR) Monthly Savings
Monthly payment £570.12 £561.52 £8.60
  • smartmortgage currently has a 4.60% (4.7% APR) variable interest rate. first direct guarantees that the smartmortgage rate will not be more than 1% above Bank of England base rate, guaranteed for the life of the loan. This applies to all smartmortgages opened before 1st January 2004.
  • first direct smartmortgage savers can benefit from the equivalent of 4.60% gross (4.70% AER) on their credit balances. As there is no tax to pay on the offset interest, this is an equivalent savings rate of 5.75% gross for standard rate taxpayers and 7.67% gross for higher rate taxpayers.
  • first direct was launched in October 1989, creating a revolutionary financial service - offering branchless telephone banking for the first time in the UK.
  • first direct offers a choice of communication channels (eg. telephone, internet, mobile phone, paying-in at branches) designed around the customer’s individual needs and focused on delivering exceptional customer service.
  • first direct has over one million customers and handles over 300,000 calls per week, with over 50% of these calls outside normal office hours (including weekends).
  • 60% of first direct customers bank electronically, using the popular internet, mobile phone and WAP services.
  • first direct currently employs over 3,700 people at sites in Leeds and Hamilton, near Glasgow.
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