The new mortgage product will initially offer a one-year fixed rate at 5.39%, which is significantly below the current base rate of 5.5%. After the first year, the rate will revert to a lifetime tracker at 0.39% above base.
In addition, the product will also offer a ‘drop and lock’ facility whereby customers will be able to switch into another Woolwich fixed or capped rate after the first year without incurring an early repayment charge.
Andy Gray, head of mortgages for the Woolwich, said: Interest rates have been heading up over the last year and most forecasters in the short term expect at least one more rise of 0.25% in base rates, and some expect two, before stabilizing or falling back in 2008. The strength of this product is that the one-year fix will clip the wings of any further interest rate rise this year whilst allowing borrowers to take full advantage of any fall in interest rates next year with a very competitively priced lifetime tracker.
Of course, the drop and lock facility, means that if interest rates don’t fall as forecast, customers will have the extra security of being able to fix on another product to ensure they know their future payments.
Other features of the fix and track mortgage include an arrangement fee of GBP595, a fully portable feature and an early repayment charge of 1% on the amount repaid within first three years. However, this is not payable if the drop lock facility is utilized.
Meanwhile, Woolwich has also dropped its 10-year fixed rate to 5.57% from 5.59%, reinforcing the group’s commitment to long-term value.
