The lender confirmed the product, tracking 0.48 per cent above Base Rate, includes a free valuation and legal fees for remortgagers. The lender has set its loan-to-value (LTV) up to 80 per cent. There are no early redemption penalties (ERCs) and the arrangement fee is £595.
A rate of 5.09 per cent is also available for borrowers looking to borrow up to 95 per cent.
Announcing the product, Andy Gray, head of mortgages for the Woolwich, said: “Woolwich built its reputation on innovation and we are pleased to offer our lowest ever rate on our offset mortgage. Borrowers should not be enticed by short-term discounted offset rates, as all the rates in the market today revert to a higher rate than ours. Even with the best headline rate of 3.24 per cent people can still save more than £4,500 over 10 years with the Woolwich.
“We think the market is ripe for the offset mortgage to come back into its own with the product likely to appeal to a wider audience than ever before.”
Andy Frankish, managing director of Mortgage Talk, admitted offset mortgages were under-used within the market. He said: “This is a great product. I personally think offset mortgages aren’t used to the best of their ability, as consumers are obsessed with getting the best rates and don’t see the benefits. Brokers need to educate people how to use the products effectively. It’s difficult, as we only have a small amount of time with the customer, but they need long-term financial education.”
The Woolwich also confirmed it had linked the offset product to its current and savings accounts. Money held in savings will get an effective interest rate of 6.2 per cent per cent for basic rate tax payers, and 8.3 per cent for higher rate tax payers.
