Woolwich, the lending arm of Barclays, has announced that it is reducing the cost of fixed rate mortgages by as much as 0.28 percentage points as swap rates continue to reduce the cost of funding mortgages.

The company has cut 0.28 percentage points from three-year fixed rate mortgages, reducing the rate to 5.69% from 5.97% on mortgages with a loan-to-value of 60% or less and to 6.19% from 6.57% at 80% loan-to-value or less.

Cuts of up to 0.18 percentage points will be made to the range of five-year fixed rate mortgages, now starting at 5.79%, and the longer term 10-year fixed rates, now available at 5.69%. At the end of the fixed rate period all of these mortgages revert to a rate of 0.95 above base, which is currently 5.95%, for the remaining life of the mortgage.

Woolwich has also launched its new Lifetime Tracker at 1.19 percentage points above base, which is currently 6.19%, for mortgages up to 80% loan-to-value with a GBP995 fee. This supplements the existing Lifetime Tracker rate of 0.69 above base for mortgages at a maximum loan-to-value of 60%.

Chris Keane, head of mortgage products for Barclays, said: Funding costs for fixed rate mortgages are coming down and competition is hotting up so we have taken the opportunity to reassert our position as one of the most competitive lenders in the market place by cutting the cost of our fixed rate mortgages. Customers will also benefit for the term of the mortgage as all of our fixed rates revert to a very competitive tracker at 0.95 above base for the remaining life of the mortgage.