THE WOOLWICH today announced it was cutting interest rates on its fixed rate deals by up to 0.6% as competition continued to return to the mortgage market.
It is the fourth rate reduction the group has made in two months, and comes just a fortnight after it launched two best-buy trackers, as it continues to focus on expanding its mortgage market share.
A flurry of lenders have cut interest rates on their mortgage deals in the past week, with Nationwide reducing the cost of its fixed rate loans by up to 0.5%, while Northern Rock shaved 0.4% of its products.
The Post Office and Principality Building Society have both also made reductions to their fixed rate mortgages.
They join a number of major lenders, including Lloyds Banking Group’s Cheltenham & Gloucester and Abbey and Alliance & Leicester, which are both part of Santander, which have cut their rates since the beginning of the month.
David Hollingworth, of mortgage broker London and Country, said the recent spate of cuts suggested lenders were beginning to compete with each other again.
He said: "Northern Rock seem to be coming back strong with the ambition to get some business on their books by the end of the year and the likes of Abbey, Nationwide and the Woolwich are responding.
"For the first time in a while, rather than just tweaking rates, lenders now seem to be competing with each other."
He added that they also seemed to be competing to offer deals for people looking to borrow up to 80% of their home’s value, rather than lenders focusing on people with at least a 40% deposit or equity stake, as they have done in the past.
The Woolwich, which is part of Barclays, is cutting rates on its two, three and five year fixed rate mortgages.
The biggest reductions are being made for people borrowing 80% or more of their home’s value.
A three-year fixed rate mortgage for someone with only a 15% deposit who pays a £999 arrangement fee is being cut by 0.6% to 6.39%, while two, three and five-year deals for people borrowing up to 80% of their home’s value and pay the same fee are dropping by 0.5%, leaving a two-year fix at 5.49%.
The Woolwich is keen to grow its share of the mortgage market and became the UK’s fourth largest lender in 2008, writing nearly 9% of new mortgages, up from just 6% in 2007.
It recently said it had continued to expand its market share in the first half of this year, while the size of its mortgage book has increased by nearly £15 billion since the beginning of 2008.