Lender Woolwich cuts mortgage rates

Tue 22 Jul 2008
LONDON (Reuters) - Woolwich, the mortgage-lending arm of Barclays (LSE: BARC.L - news) , said it has trimmed its mortgage rates in response to an easing in wholesale borrowing costs.

Woolwich said the rate on popular three-year fixed-rate mortgages will on Tuesday fall to 6.29 percent from 6.49 percent, with five-year fixed rates dropping to 6.29 percent from 6.39 percent.

The biggest cut is for Woolwich's 10-year loans, where the rate falls to 5.97 percent from 6.29 percent. All changes apply to mortgages of up to 60 percent of the value of the underlying property.

Woolwich said the cuts came in response to a fall in the cost of interest rate swaps, used by banks to price fixed-rate mortgages.

"We have seen an improvement in the swap rates recently and we have taken the opportunity to reduce our longer-term fixed rates where we see customers can get the best value at the moment," Woolwich Head of Mortgages Andy Gray said in a statement.

Woolwich's rate cuts follow similar moves last week by mutually owned lender Nationwide and Cheltenham & Gloucester, part of Lloyds TSB (LLOY.L).

However, mortgage costs remain historically high, having risen sharply in the past year as banks stung by the credit crunch seek to conserve capital and protect profits. The abrupt drying up of cheap mortgage finance has triggered a slump in house prices, ending a ten-year property boom.

Financial services data company Moneyfacts said on Monday that lenders' recent cuts had reduced the average rate for two-year fixed loans to 6.96 percent, down from a ten-year high of 7.08 percent on July 11.

Woolwich accounted for 28 percent of all net new lending during the first three months of 2008, up from 8 percent a year earlier, a Barclays spokesperson said.

Source: http://uk.biz.yahoo.com/21072008/325/
lender-woolwich-cuts-mortgage-rates.html