Barclays Cuts the Cost of Popular Mortgage Deal

The Times reported yesterday that one of the largest UK lenders - Barclays - announced a 0.45% cut in the interest rate on a mortgage deal that is considered the most popular among bank's borrowers. Moreover, the bank said it will remove the restrictions previously imposed on mortgage loans. Barclays' lifetime tracker deal, offered earlier at 3.24% will now cost borrowers 2.79%, which is 2.29% above the base rate of 0.5%, set by the Bank of England. Borrowers with a min. 30% deposit will be able to benefit from the reviewed deal, which includes a £999 fee and a 1% early termination fee during the first 2 years. The only mortgage rate available on the UK market that outperforms the one offered by Barclays can be accessed through the HSBC bank. HSBC tracker deal is offered at 2.74% (2.24% above the base rate), however, it is only available to borrowers with at least a 40% deposit. UK borrowers with a 30% deposit might also be interested in a new lifetime tracker deal launched by Woolwich: its interest rate stands at 3.19%, however, the deal includes absolutely no fee. UK mortgage brokers claim that a large number of UK lenders might have introduced new tracker rates because of the high demand from borrowers. For instance, Mr. Aaron Strutt, mortgage broker of Trinity Financial Group, is determined that borrowers find tracker rates more attractive as they prove to be cheaper than most fixed-rate deals, which have become more expensive than usual in the past quarter. Moreover, experts of the financial industry believe that the Bank of England's base rate will remain at the level of 0.5% for some more time (some say it will stay low for the next 2 years). Let us remind that Barclays managed to significantly expand its share on the UK mortgage market this year by lending as much as £15 billion since 2007. It is now the 2nd biggest UK lenders in terms of net lending.