Bradford & Bingley urges borrowers to look beyond the hype

Otherwise, it could end up costing them more in the long term.

NatWests mortgage challenge, for example, is restricted to borrowers withAbbey, C&G, Halifax and Lloyds TSB and promises to pay £250 if it can't lower a borrower's new mortgage repayments. Nationwide promises to pay £150 if it can't match or lower a borrower's new monthly payments with either Halifax, Abbey, C&G, HSBC, NatWest, Woolwich or Northern Rock.

However, lowering monthly repayments is only worthwhile if it saves the borrower money over the term of the deal. If it doesn't, when including arrangement fee costs, exit fees, possible legal and valuation fees, then there is only one winner - and it's not the borrower.

Example: A borrower with a £100k loan over 20 years has a current mortgage offer of 4.79% (no arrangement fee). While NatWest's 2-year fixed rate deal at 4.65% means the borrower's monthly payments would fall from £648.41 to £640.77, when the £395 arrangement is added, the borrower would actually be £212 worse off.

Duncan Pownall, mortgage development manager for Bradford & Bingley, said: "On the surface challenges such as those promoted by NatWest and Nationwide appear a winning proposition, however, on closer inspection it could turn out to be a losing one for the borrower. Lowering monthly repayments is

easy to achieve and is futile unless it ultimately saves the borrower money over the term of the deal.

There could be a number of instances where a borrower actually ends up paying more because of the amount of fees they have to pay. It's imperative, therefore, that a borrower reads all the

small print carefully before signing up to any new deal."