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Categories:Mortgages

Fixed decade from Barclays/Woolwich

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Barclays/Woolwich – 10-Year Fixed Rate

Type: Fixed rate mortgage 

Fixed term: Until February 28, 2022

Fixed rate: 4.99% 

Minimum loan: £5,000 

Maximum loan: Up to 70% of valuation subject to a maximum of £1m

Income multiples: Based on affordability

Conditions: Capital repayments of up to 5% a year allowed without penalty in the fixed-rate period, free valuation, free legal fees of £200 cashback for remortgages

Arrangement fee:  £1,499 

Redemption fee: 6% of the amount repaid in the first seven years, 3% in years eight to 10 Introducer’s fee: Refer to lender 

Tel: 0845 070 1567

This deal is fixed at 4.99 per cent for 10 years and is available for loans up to 70 per cent of valuation to £1m. Looking at how the product fits in to the market, London & Country Mortgages head of communications David Hollingworth says: “Having a broad spread of mortgage product options is important for brokers to help deal with the spread of individual circumstances that their clients have.  Therefore, Woolwich’s 10-year fixed deal covers an area of the market that is not well served.”

Hollingworth says that with the base rate at a record low, many people will like the idea of locking in now to take advantage of the low point in the cycle. “That will help protect them from future volatility and inevitable rate rises that must cone eventually.”

He adds that the fee is not inconsequential at £1,499 but over 10 years it will have less of an impact on the rate than it would for a shorter-term deal.

“Although overpayments are limited to 5 per cent a year rather than 10 per cent for most Woolwich deals, it should be adequate flexibility for many.”

Turning to the potential drawbacks, Hollingworth says: “The reason that there are relatively few mortgages in this area is that most borrowers are nervous about locking in for ten years.  If they need to review their mortgage requirement or move home there is no guarantee that the existing lender can assist with the new requirement. That has posed problems for customers looking to port recently as they have faced tighter criteria.”

He adds that early repayment charges starting at 6 per cent would prove costly if their situation changes and most people are not keen to commit to 10 years ahead.

Discussing the potential competition, Hollingworth says: “There are only a limited number of products available on 10- year fixed rates. The Woolwich rate sits among the pack alongside Leeds and Co-Op.  Norwich & Peterborough offers a deal way ahead at 3.99 per cent and carrying a lower fee.”

Summing up, Hollingworth says: “I think it’s good for lenders to explore different product areas and Woolwich is good at ensuring brokers have options.  However, I suspect that the 10-year fix will not be the star performer in terms of volume, due to the limited appeal of long term fixes.”

BROKER RATINGS

Suitability to market: Average

Competitiveness of rate: Average        

Flexibility: Good

Adviser remuneration: Good

Overall 6/10

 

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