The Co-Op's new mortgage deal

Commenting on the Co-Op's new mortgage deal, Louise Cuming, head of mortgages at moneysupermarket.com, said: "Tying customers into a current account with the lure of an attractive mortgage product range is a clever move by the Co-Operative Bank. By targeting its current account customers, the Co-Op can cherry pick the most financially sound applicants, so its market leading rate will only be available to market leading applicants.

"The Co-Op is not the first to buy customer loyalty in the current account market. We have already seen RBS insist applicants for its One Account have their salary paid into the linked current account, and for a time First Direct only lent to existing customers. As banks continue to fight tooth and nail to keep or grow their customer base, linked products remain a useful tool.

"Co-Op customers with equity or a sizeable deposit will be laughing as they are eligible for the 5.99 per cent mortgage rate. But borrowers without these will pay much higher rates - further widening the gap between the haves and have nots.

"If you are interested in this deal, you should also consider an offset product. If you have a healthy current account balance, the effect of offsetting may actually help you repay your mortgage quicker.

"If offsetting doesn't suit you, you should compare current account interest rates before opting for the Co-Op. There are likely to be substantial funds going through the account and the Co-Op current account doesn't attract any interest, while some current accounts pay eight per cent or more - which might negate savings made through the mortgage."