The product, priced at 5.29 per cent for 10 years, hopes to boost the availability of longer term mortgages at a time when there is increased volatility in the mortgage market on an almost daily basis.
Official figures from the Council of Mortgage Lenders suggest over 1.7 million borrowers will be coming off fixed rate mortgages in 2008. The vast majority of these are currently on rates at levels below base rate at 5.25 per cent, whereas most current mortgage products are above base rate, leaving a potential funding gap for millions of borrowers.
The new fixed rate which will have a fee of £995 and a loan to value of 60 per cent is aimed at this market where customers have built up equity over recent years.
Andy Gray, head of mortgages for the Woolwich, said: “The mortgage market is hugely uncertain at the moment and lenders are continually re-pricing products. However, the long term swap market has steadied at lower levels and we have been able to put together a long term product at an historically very competitive rate. With over 1.7 million coming off fixed rates this year, and several hundred thousand of these on rates longer than five years, we expect many consumers will want to fix for the long term to avoid short term volatility.
“We believe this will be the best priced long term product in the market place. With the government looking to encourage longer term fixes, and with consumers looking to avoid short term volatility, we expect this product to be popular with borrowers. If nothing else it will certainly show whether consumers have an appetite to fix over the longer term, as the rate is hugely competitive.”
Product details for ten year fix rates:
- Fixed for ten years at 5.29 per cent
- Reverts to tracker at base + 0.95 per cent after initial fixed rate period
- Arrangement fee £995 (can be added to the loan)
- Loan-to-value of 60 per cent
- Borrowers can overpay up to 5 per cent per annum without any charges during the fixed rate period
- 6 per cent early repayment charge during the fixed rate period
