Woolwich redefines the word "extended"
Posted on 21 October 2013 by
Woolwich sent an email to brokers today headed “Exciting new products launching.”
I suspect it would be difficult to find many, if any, people, including brokers, who actually think that any mortgage is “exciting” but in this email Woolwich claims it is “committed to the first time buyer market and to demonstrate this commitment, on Tuesday 22 October, we are cutting rates on our award-winning 3 year fixed Family Springboard mortgage from 3.99% to 3.69% and will introduce two new 3 year fixed at 85% LTV and 90% LTV (3.69% and 4.65% respectively).”
It adds “To further support home buyers and customers looking for great remortgage deals, we will also reduce the rates on our 2 year fixed 75% LTV to 2.30% and 85% LTV to 3.25%. And we've extended our 5 year fixed range to include a new 75% LTV tier at a rate of 3.29%.”
Bearing in mind this information was in an email to brokers, not a press release puff, a little more balance in this email would have been helpful.
Whilst any rate reductions are welcome a cut of 5 and 10 basis points respectively in the 75% and 85% LTV 2 year fixed rates is not exactly worth shouting about.
The only meaningful good news in Woolwich’s email is its new 3 year fixed rate to 90% LTV at 4.65% with a fee of £499 and a cut of 0.3% to 3.69% in the 3 year fixed rate Springboard mortgage (which has an effective maximum LTV of 85%), plus the launch of a standard 85% LTV 3 year fixed rate with the same rate and fee, but a revert to rate which is 0.25% lower than with Springboard (Bank Rate + 0.74% v Bank Rate + 3.99%). These mortgages are all competitive.
However, although Woolwich has left its headline 5 year fixed rate of 2.88% to 60% LTV unchanged, several of its other 5 year fixed rates are either being increased or pulled. The 2.95% rate to 65% LTV with a £1,999 fee goes up to 3.09% and the purchase only 2.99% rate with a nil fee is increased by 0.26% to 3.25%.
Woolwich claims that “we've extended our 5 year fixed range to include a new 75% LTV tier at a rate of 3.29%.” Despite the launch of its new 5 year fixed rate up to 75% LTV Woolwich clearly has an unusual understanding of the definition of the word “extended” as it has pulled and not replaced 3 of its existing 5 year fixed rates - 2.99% to 70% LTV, 3.99% to 85% and 4.89% to 90%, all with a £999 fee. Presumeably the reason it has pulled the 90% LTV rate is because it is "committed to the first time buyer market."
Apart from the change in its 5 year product range being a reduction, not an extension as claimed, it also results in an effective rate increase of 0.3% for anyone wanting to borrow up to 70% LTV, although the reality is that Woolwich has effectively priced itself out of the 5 year fixed rate market at that LTV.
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