Barclays' mortgage unit Woolwich has launched a new mortgage product that combines both a fixed rate and lifetime tracker as a response to the recent increases in base rate mortgages.
The mortgage has a fixed rate at 5.19% for the first two years and then drops to a lifetime tracker at 0.19% above base rate, safeguarding consumers against further interest rate rises. In addition, there are no early repayment charges after the first two years. This is the only short-term fixed rate on the market which reverts to such a low rate after the fixed period.
Economists are divided over how much higher interest rates will go with many expecting one if not two further rises, commented Andy Gray, head of mortgages for Woolwich. This new product allows borrowers, nervous about short-term interest rate movements, to fix now to cover any short-term hikes but then have the advantage of switching to a market-leading lifetime tracker in two years which could have the advantage of tracking rates down if the interest rate situation takes a turn for the better.
Woolwich said that it will continue offering its popular mortgage product with a 10-year fix at 4.98% and 5.17% lifetime tracker.