Barclays mortgage rate below 4%
Updated on 13 November 2008
Barclays has launched a one-year fixed rate mortgage at below 4% as the cost of wholesale funding continues to fall.
The group, which lends under the Woolwich brand, is offering a one-year fixed rate deal of 3.99%, after which borrowers will switch to a lifetime tracker of 1.99% above the base rate.
The mortgage is available to people with a 40% deposit who pay a £995 arrangement fee, although other options are available for people with only a 30% deposit or those who do not want to pay a set up charge.
Other lenders have offered one-year fixed rate loans in the past, but none do so at the moment, and the rate is currently the most competitive on the market.
However, borrowers are locked into it for three years and will have to pay an early redemption fee of 1% of the amount borrowed if they want to exit it sooner.
Ray Boulger, senior technical manager at John Charcol, said he would be more likely to go for a standard tracker mortgage, as this would provide a similar rate in years two and three, and could be cheaper during the first year if interest rates continue to fall.
He added that as people would have to pay a redemption penalty if they wanted to exit the deal within three years, they would not be able to switch to another fix when they thought interest rates had hit the bottom of the cycle.
Barclays has also relaunched its offset tracker mortgages, under which people can use their savings to reduce the interest they pay on their mortgage.
It is offering rates of 2.09% above base rate for term for people with a 40% deposit, and 2.49% above it for people with a 30% one.
But the group has yet to relaunch its other tracker products, which were withdrawn last week.
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