Woolwich slashes two year fixed rate mortgage

With consumer nervousness continuing over how far rates will increase, Woolwich today cuts the borrowing rate on its two year fixed rate.

The rate drops to 5.89 per cent, thirty basis points below its previous offer. This is the best two year fixed rate remortgage deal overall from a high street lender and comes with free valuation and legal fees.

The deal is also available for purchases and is fixed until September 30, 2009 at 5.89 per cent, reverting to a lifetime tracker at 0.95 per cent above base rate safeguarding consumers against further interest rate rises. It is available up to 80 per cent of the property valuation with an application fee of £995 and early repayment charge of 3 per cent.

Andy Gray, head of mortgages for Woolwich said: “Economists still expect rates to increase this year and with two increases already this summer, consumers who need to budget their monthly outgoings are getting squeezed. This new product allows borrowers to fix now to cover any hikes over the next couple of years. For those who only need short term security and want to see what rates do, the 1 year Fix and Track (5.39 per cent) gives a really good solution. The Fix and Track deal has the advantage of tracking rates down after one year if the interest rate situation takes a turn for the better.”

For consumers who are not concerned about fixing, the lifetime tracker at base +0.17 per cent is still available.

Product detail on two year fixed rate:

Fixed until September 30, 2009 at 5.89 per cent
Reverts to tracker at base + 0.95% after the two year period
Arrangement fee £995
Rate available for mortgages up to 80 per cent of the purchase price/valuation
3 per cent early repayment charge in the first 2 years
Borrowers can overpay by 10% per annum without any charges in the first 2 years.
Maximum mortgage £500,000

Key features on all our residential mortgages:

Customers switching from another lender can use Woolwich Switch & Save package with no valuation or legal costs.

Maximum flexibility: overpay, underpay & payment holidays
Available to all existing and new customers
No higher lending charge or early repayment charge beyond the fixed, capped or discounted period.
Daily interest
Flexible features on fixed rate mortgage such as overpaying by 10 per cent per annum without incurring any early repayment charge (on the 10 year fixed rate borrowers can overpay by 5 per cent per annum).
Fully portable