In the wake of the new fall in costs of wholesale lending between the banks to the lowest level seen since 2003, the mortgage arm of Barclays, the Woolwich has launched a special one year fixed rate deal at just 3.99 percent.
The Woolwich is the UK’s sixth largest mortgage lender and the new mortgage is available to borrowers with a deposit of 40 percent. Following the one year fixed interest rate, the deal reverts to a tracker mortgage, which will track the Bank of England’s base rate at 1.99 margin, so currently just 4.99 percent.
The deal is called ‘Fix and Track’ and is still available to those who do not want to pay a fee or those with a smaller deposit, but at a slightly higher rate.
The deal has a three year tie-in and an early redemption charge at 1 percent of the loan.
The offer has been criticised by experts, as although the starting rate is great, it is the wrong way round for many borrowers who want to take advantage of the current low rates with a tracker, rather than fix themselves in for three years. It certainly protects the bank from further decreases in the interest rate for the next twelve months.
Existing borrowers on tracker mortgages with Barclays are still waiting to find out if Barclays, one of the UK’s major lenders, will actually pass on the 1.5 percent base rate cut given this month by the Bank of England.