Woolwich cuts rates but Libor rises

Woolwich, the mortgage lending arm of Barclays, is launching a new range of loans at up to 75% loan-to-value (LTV).

The deals include a three-year fixed-rate mortgage at 5.84%, and a two-year fix at 5.99%.

The lender is also providing new loans at a maximum LTV of 60% and with a £995 fee as follows: two-year fixed-rate down from 5.99% to 5.79%; three-year fix down from 5.69% to 5.54%; five-year fix down from 5.79% to 5.64% and a ten-year fixed-rate down from 5.69% to 5.64%

Changes to lifetime trackers include a new tracker at base rate +0.84% (down from down from base rate +0.89%), with no fee and no early repayment charge.

Customers who are remortgaging under Woolwich’s Switch and Save schemes will have their legal and valuation fees covered.

The trend among lenders to regularly trim mortgage rates has come under threat from yesterday’s events on Wall Street and the collapse of investment bank, Lehman Brothers.

The shockwaves are still reverberating in world markets but already, Libor, the rate at which banks lend to one another, has risen sharply, reflecting a lack of confidence in the global banking sector.

Since the onset of the credit crisis, Libor, rather than the Bank of England’s base rate has dictated UK mortgage rates and there is a danger that the UK’s mortgage market could once again freeze up, just as it had begun to thaw.

Discuss this in the Finance Markets forums

Story link: Woolwich cuts rates but Libor rises