Two successive base rate increases and nervousness over the next move in interest rates has led Woolwich to introduce an innovative new product that is a combination of fixed rate and lifetime tracker to help customers manage rising rates.

The mortgage is fixed for the first two years at 5.19 per cent and then reverts to a lifetime tracker at 0.19 per cent above base rate safeguarding consumers against further interest rate rises. There are no early repayment charges after the initial two year fix. This is the only short term fixed rate on the market which reverts to such a low rate after the fixed period.

Andy Gray, head of mortgages for Woolwich said: “Economists are divided over how much higher interest rates will go with many expecting one if not two further rises. This new product allows borrowers, nervous about short term interest rate movements, to fix now to cover any short term hikes but then have the advantage of switching to a market leading lifetime tracker in two years which could have the advantage of tracking rates down if the interest rate situation takes a turn for the better.

Of course the other advantages are that borrowers should come out from one very competitive rate to another meaning they do not have to go through the usual two yearly mortgage switching process that has become endemic in recent years.”

This latest product will not be for everyone so we are also continuing our popular 10 year fix at 4.98 per cent and 5.17 per cent lifetime tracker (base +0.17 per cent).

The new mortgages being launched by Woolwich are:

Two year fix followed by lifetime tracker – 2 year fixed rate at 5.19% until 31/01/09 following onto Base +0.19%; 80% loan to value; Early repayment charge is 3 per cent of the balance until 31/01/09. Application fee £995.
Buy to Let – lifetime tracker at +0.49 per cent above base rate with no early repayment charge.
Buy to Let – five year fixed re-mortgage package at 5.89 per cent, no valuation or legal costs.

Key features on all our residential mortgages:

Customers switching from another lender can use Woolwich Switch & Save package with no valuation or legal costs.
Maximum flexibility: overpay, underpay & payment holidays
Available to all existing and new customers
No higher lending charge or early repayment charge beyond the fixed, capped or discounted period.
Daily interest
Flexible features on fixed rate mortgage such as overpaying by 10 per cent per annum without incurring any early repayment charge (on the 10 year fixed rate borrowers can overpay by 5 per cent per annum).
Fully portable