Woolwich cuts rates; Drop-lock added to mortgages

Woolwich will cut the interest rates it charges on mortgages up to 80% LTV by up to 0.21% from tomorrow.

The price reductions mean the rate at which a Woolwich two-year fixed rate at 80% LTV is charged will fall from 4.59% to 4.38%. Its three-and five-year fixed rates will also come down slightly by 0.1% to be charged at 4.79% and 5.39% respectively.

Woolwich will also introduce a ‘drop-lock' facility for all new borrowers taking out its tracker and offset mortgages.

A ‘drop-lock' gives borrowers the option to switch from a variable rate onto a fixed rate at no extra cost, which can be very useful if interest rates start to rise.

At the same time the lender will launch a lifetime tracker mortgage available up to 80% LTV, which is charged at Base Rate plus 3.38%, giving a current pay rate of 3.88%.

Andy Gray, head of mortgages for Barclays, says: "With speculation this week that UK interest rates are set to stay at record lows until 2014, the drop lock facility provides customers with peace of mind that they can go into a low tracker rate now and switch at a point in the future when they need greater security."