Woolwich competes with rivals by cutting mortgage rates

Woolwich has joined the battle for mortgage customers, slashing home loan rates by up to 0.80%.
Woolwich competes with rivals by cutting mortgage rates


The mortgage arm of Barclays has responded to bold moves by rivals by cutting several of its fixed rate deals.


A two-year fix at 80% LTV is now priced at just 2.33%, with a £999 arrangement fee.


This is just below the market leader for this sector, Platform Mortgages. The intermediary lender of the Co-operative Bank enters at 2.24% but has a much higher standard variable rate when the fixed term ends.


Woolwich has also boosted its offers for longer fixed-rate loans. A five-year mortgage at 70% LTV is available at 2.95%, only fractionally below market leaders in this sector.


Again, Platform tops the tables here, but only just, while a steep £1,499 product fee makes the deals from Woolwich (£999) and the Cumberland Building Society (£699) seem far better value.


For those keen to secure themselves against uncertainty for longer, Woolwich has cut the fee on its decade-long fix by £500 to boost its competitiveness.


At 75% LTV, homeowners can secure a ten-year fix at 3.99%, which is the market leader in this sector by some margin. A reduction in fee from £1,499 to £999 will save customers an extra £500, which adds to the appeal.


But the recent fall in inflation has postponed the prospect of an increase to the base rate until deep in 2015, and brokers believe that rates could fall further.


Ray Boulger, of independent brokers John Charcol, said market conditions could push the rate down by another half-percent.


“This looked reasonable value when five-year fixes were above 3%, but now it looks very uncompetitive,” he said.


“A 10-year fix at 3.5% would be attractive to borrowers who don’t mind being locked in for that long.”


Woolwich is responding to HSBC, which has unveiled an eye-catching mortgage at just 0.99%.


The discounted variable rate deal, available at 60% LTV, comes with a £1,999 fee. When this is factored into the cost, the mortgage becomes a market leader for loans above around £300,000.


See Woolwich's entire mortgage range here.


Keith McDonald

Which4U Editor

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