Money News
Woolwich is launching a new mortgage which it claims will take advantage of any future drop in interest rates as many commentators expect during 2008.
The new product will for the first year track at 0.26% below base rate (current pay rate of 5.49%) and for the following two years will track at 0.39% above base rate - which means base rate would effectively have to fall to 5% or less for the rate in years two and three to be less than the rate being charged now.
Several forecasters are expecting base rate to fall to 5% by end-2008 but that doesn't mean it will happen. The mortgage has a 'droplock' facility whereby at any time, without early repayment charges, customers can switch to a Woolwich fixed or capped rate mortgage if they feel this would be more appropriate.
The arrangement fee is £995 and there's a one per cent early repayment charge during the fixed rate period although borrowers can overpay up to 10% per annum without any charges. Borrowers switching from another lender can use Woolwich Switch & Save package with no valuation and legal costs.
In addition Woolwich is making some additional changes to its mortgage range. On its fixed rate mortgages it will maintain a 10 year fix at 5.59%, whilst the five year fix will now be priced from 5.69% and the two year fix will be priced from 5.89%.
The Lifetime Tracker mortgages will be streamlined from two into one product. The rate will be priced 0.27% above base for LTVs of up to 80%, a cut of one basis point on the previous pricing. There will no longer be a 60% LTV product.
10 October 2007 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.