Bray says: “With the house purchase market struggling to show any signs of life, many providers have turned their attention to the remortgage market. Woolwich is one such lender and has extended its Great Escape remortgage range by launching new fixed rate products. Woolwich is targeting some 700,000 borrowers that could benefit financially by remortgaging to a better rate.
“One of the new products is a 2-year fixed rate at 3.48 per cent which is only available for customers looking to remortgage. The rate is attractive but is enhanced by the fact that Woolwich does not charge an arrangement fee. This basically means that if a customer is currently on a standard variable rate of more than 3.5 per cent then it is likely that this deal could save them money as well as protect them against the inevitable increase in mortgage rates in the future.
“The product is available for loans up to 75 per cent LTV and comes with free legal work, free basic valuation and £300 cash-back which should cover the cost of any exit administration fees on their existing mortgage. An overpayment facility that allows 10 per cent of the outstanding balance to be repaid each year without penalty is also available.
“The FSA has stated in its Mortgage Market Review discussion papers that two areas it intends to tighten criteria are interest only mortgages and proving affordability. In light of this and following changes made by several other main mortgage lenders, Woolwich has recently amended its lending policy for interest-only mortgages by restricting them to a maximum 75 per cent LTV and 25-year mortgage term.
“For affordability, Woolwich already has criteria in place to assess disposable income as well as income multiples that are linked to credit score results.
“Mortgage advisers have an opportunity to re-visit their client banks and identify customers that may financially benefit from remortgaging to this type of product. If you add in the uncertainty of house prices, tougher regulation and the inevitable rise in interest rates then fixing at this price without paying any fees starts to make a good deal of sense.”