Co-operative Bank gives banking customers lower mortgage fees

The Co-operative Bank likes its current account and banking customers so much, it's trimming nearly £800 off its typical mortgage fees for them.

And why not?, we say.  This kind of loyalty incentive is looking more common across the industry (see related story on Coventry Building Society).

The Co-op's new tracker deals are exemplified by the 3-year tracker that runs at 2.99 points above Bank of England Base Rate, giving a current rate of 3.49 per cent. It has a £199 fee. This and other tracker deals require borrowers to have an active current account at the bank.

Compare that to its fixed rate mortgages or its 3-year discounted rate mortgage—available to all comers, with a £995 fee—and you'll appreciate the difference.

What's more: Privilege or Privilege Premier current account customers, who pay subscription fees of £9.50 or more per month for a packaged account with complimentary benefits, can get the same deal for no fee whatsoever.  This also applies to Smilemore customers (the subscription current account offered by Co-operative Bank's internet-only offshoot Smile).

These loyalty bonuses aren't bad at all, considering there are other benefits to banking with the Co-operative anyway: a bank with an ethical policy and one that's been (perhaps not coincidentally) unshaken by the financial market mayhem over the last 18 months.

However, if you think base rates might go back up by a couple of points—and I wouldn't think a return to 3 or even 4 per cent within three years is unforeseeable—the question is whether you'd be satisfied with a tracker running that high over base to begin with.  We love the fee deal, but we'd be cautious about the mark-up!