Niche offset mortgages go mainstream as new rates from Woolwich make them cheaper than most lifetime trackers
The Woolwich Offset mortgage is now guaranteed to stay at 0.39 per cent above base rate for life (current rate of 5.14 per cent). At the same time Woolwich will be re-launching its best selling flexible lifetime tracker mortgage at a new rate of 0.17 per cent above base making it the best priced long term tracker on the market. The launch of the two new products is aimed at appealing to as broad a cross section of borrowers as possible, those with no savings going for the lifetime tracker and those with some savings looking at the offset. They follow on from the launch of Woolwich’s ‘City’ offset mortgage last week.
Andy Gray, head of mortgages for Woolwich (http://www.barclays.co.uk/woolwichmortgages/ ), explains: “The latest offset mortgage (http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=articleFWwealth&value=9636&target=_self ) means that a borrower with an average mortgage of £100,000 would only have to offset an average £4,200 to keep monthly payments as low as the best in market Woolwich Life Time Tracker set at a mortgage rate (http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=articleFWwealth&value=9629&target=_self ) of 4.92 per cent. However, if you can’t muster that amount of savings the Lifetime Tracker makes absolute sense.”
“When we first launched offset six years ago the rate was set at 0.75 per cent above base and although it became a very popular product it was seen as one that benefited those with large savings balances the most. However, today with the rate at just 0.39 per cent above base rate, offset is better value than most trackers in the market. Even compared to other offset deals it easily beats the rates of our major competitors like the One Account, which has a best rate of 5.85 per cent, 0.61 per cent higher than the Woolwich product.”
The consumers who will benefit most from Offsets are:
- Those who hold modest to large balances on their savings or current accounts - money held in savings will get an effective interest rate of 6.59 per cent per cent for basic rate tax payers, and 8.57 per cent for higher rate payers, much better than all but the shortest term savings products on the market.
- Those who are self employed and pay a year-end tax bill but hold the money in reserve throughout the year
- Anyone who has a disciplined approach to their financial circumstances and who makes regular overpayments to their mortgage or contributions to their savings.
- Higher-rate taxpayers can pay in bonuses and reduce their mortgages with this deal
Barclays is also offering its home insurance (http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=channelFWgroup&value=7391&target=_self ) price guarantee as part of the Offset mortgage. The insurer’s guarantee states that it will beat any customer’s current home insurance renewal quote on like for like cover with two years no claims and if not they will drop their price up to a maximum of £100 and give the customer £50 when they switch to Barclays.
List of competitors offset products available in the market, based on a £100k mortgage:
Woolwich, Rate Base +0.39% (5.14%), Fee £595, LTV 80%, Total cost over a 5 year term £26,295
Abbey, Rate Base +0.49% (5.24%), Fee £499, LTV 90%, Total cost over a 5 year term £26,699
IF, Rate Base +0.74% (5.49%), Fee £499, LTV 85%, Total cost over a 5 year term £27,949
Clydesdale, Rate Variable 5.54%, Fee £349, LTV 90%, Total cost over a 5 year term £28,049
C&G, Rate Base +0.90% (5.65%), Fee £0, LTV 95%, Total cost over a 5 year term £28,250
The One Account, Rate Variable 5.85%, Fee £0, LTV 50%, Total cost over a 5 year term £29,250
Source: Moneyfacts for rates, fee, LTV and Woolwich for total cost over a 5 year term.
Both Woolwich products have no early redemption fees and are fully flexible, they have free legal fees and surveys for remortgages. Applications fees are £595 for the offset and £795 for the lifetime tracker. Customers can find out more about all our new and existing mortgages by visiting their local Barclays or Woolwich branch, via the internet or by phoning 0845 607 1111.
An advertising campaign on Woolwich mortgages across TV, radio and press will begin on 19 October.
Woolwich mortgages (http://www.barclays.co.uk/woolwichmortgages/ )
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