** updated as rate reduced to 1.25% **
This deal isn't for everyone - just those that have built up 50% equity in their property through property price rises, mortgage capital repayments or some combination of the two. Of course, first time buyers can apply - but those with a 50% deposit will be few and far between.
The 1.25% rate is the lowest that's been offered for such a product in about 10 years.
There's a £999 fee which would be a big concern if this were a 2-year product. I'm on a lifetime rate with First Direct myself and like the fact that payment of one fee secures you a good deal for the life of your mortgage. Too many people pay fees every 2 or 5 years without putting much thought into it.
As anyone who's investigated mortgage deals with the scrutiny they deserve will realise, when a mortgage balance gets lower, it becomes difficult to get good deals because fees represent too high a percentage of the outstanding value of the mortgage to make switching worthwhile. This leaves a lot of people stuck on standard variable rates or some sort of poor retention deal.
With these lifetime rates, at least you know you'll always be on a pretty competitive deal. Of course, Coventry base the rate on their variable rate as opposed to the Bank of England base rate - but they've never raised this above the BOE rate in the past and to do so in the future would be a very poor commercial decision from them. In the unlikely event that they do this, the product has no early repayment charges so you could just switch at any time.