New Woolwich Mortgage Deals Come Along With Stricter Lending Criteria

The latest announcement by Woolwich – Barclays’ mortgage branch – suggests that the lender is tightening affordability criteria for borrowers, while introducing new attractive mortgage deals. Being the 4rth biggest lender in the United Kingdom, Woolwich launches several new deals for borrowers with small deposits, and cuts the cost of its best buy tracker mortgage deal starting November 11th. From now on, Woolwich popular tracker mortgage deal will be available for borrowers with as little as 25% deposit at 2.94% (or 2.44% above the base rate) and a fee of £999. The lender also introduced a new 2-year fixed-rate mortgage deal available for borrowers with 25% deposits at 3.99% and a fee of £999. Another tracker mortgage offer by Woolwich is available for 70% LTV at 2.77% (or 2.27% above the base rate). Meanwhile, Woolwich also tightens affordability criteria for potential borrowers, increasing the affordability interest to 5.69%, up from 5.29%. This means that mortgage applicants will have to provide Woolwich with income proof suggesting that they can afford a 5.69% interest rate, even if they are targeting a mortgage deal with a lower interest rate. Despite the fact that borrowers negatively reacted to the changes, Woolwich claimed that the new rules are aimed at the protection of borrowers themselves. According to the lender, increased affordability interest rate is supposed to ensure borrowers’ ability to repay their mortgage once the base rate rises. Let us remind that last year a similar change was introduced by Abbey, when it increased its affordability rate to 7%, up from 5.44%. Mortgage brokers, however, are determined that Woolwich tries to discourage mortgage borrowers and to exclude them from the most attractive mortgage deals. It should be noted, though, that such mortgage industry experts as Steve McAvan, of Yorkshire Building Society, and David Hollingworth, of London & Country Mortgages, do admit that Woolwich is not the only lender that has taken measures to prevent mortgage arrears, which might arise from increases in the base rate.