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The Woolwich have reduced the price of their fixed and lifetime tracker mortgages and followed Nationwide’s lead by offering a drop lock facility for new mortgage customers.

A drop lock allows borrowers on an offset or tracker rate mortgage, to switch into one of the fixed rates available at the time, without paying an early repayment charge. This option has been popular with Nationwide’s customers as it offers them extra payment protection. If the Bank of England base rate increases suddenly, borrowers would be able to call the bank and choose a fixed rate deal.

Woolwich have some of the lowest tracker rates on the market and their cheapest term tracker is 2.89%. It is available for loans up to £1 million and the arrangement fee is £1499. Their lowest two-year fixed rate is 3.49% and that has a £999 arrangement fee.  Both mortgages require a 30% deposit and the Woolwich will pay the property valuation and legal fees for those wanting to remortgage to them.

August 2, 2010

Interest rates could be kept on hold until the end of 2013, according to economists Ernst & Young.

They say that high energy prices and the increases in VAT will keep inflation above target over the next 18 months. This prediction is based on the assumption that the impending spending cuts filter through to the economy.

Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club, is quoted as saying: ”A base rate of 0.5% will begin to look more normal. On the assumption that the government is able to implement the overall reduction of the £40 billion it set out in the budget, we expect that UK growth will struggle to reach 1% this year but will gradually speed up in the following years to give the UK a high-quality recovery based on trade and investment.”

Mervyn King, governor of the Bank of England also said this week that it is likely to be some time before the Bank’s base rate returned to ”normal levels”.

July 30, 2010

Gross mortgage lending buy mutuals was up 19% in June at £1.78 billion, reports the Building Societies Association.

The increase compares to £1.507 billion of gross lending in May and is 34% higher that the average of £1,345 million over the previous five months.

Part of the reason building societies are lending more is the increased level of savings. Over the last 6 months more people have been saving and deposits were up £16 million in June.

July 30, 2010