Barclays has launched a new tracker deal through its mortgage arm Woolwich to encourage borrowers off standard variable rates.
Barclays says that its new deal, The Great Escape remortgage package, will help to 'liberate' customers who are waiting on standard variable rates when their fixed terms end, until something better comes along or interest rates start to rise.
Aimed at borrowers who believe it would cost more than it is worth to move to a better rate with a different lender, The Great Escape is a tracker mortgage offering a rate 2.18 per cent above the base rate, currently 2.68 per cent.
Commenting on The Great Escape mortgage, Andy Gray, head of Barclays mortgages, said that Barclays has built the package to help those borrowers who "feel trapped on their current lender's SVR" – an estimated 700,000 families.
The remortgage offering has a loan to value of up to 70 per cent, no application fee, free legal work and valuation, and £300 cashback to cover the cost of their existing lender's exit fee.
Eliminating the cost of switching, Mr Gray said, "will help stimulate the market", and it is worth borrowers' while to switch because it would save them £60 per month, or more than £700 a year, based on a £150,000 repayment mortgage and many SVRs costing 3.50 per cent or more. Moving from a 4.00 per cent SVR would result in annual savings of more than £1,200.
Mr Gray believes that while the base rate remains at its record low of 0.50 per cent, "anybody delaying the decision to ditch SVR is paying more than they need to."
For those borrowers who are concerned about signing up for a tracker mortgage when a rise in interest rates could be around the corner, Woolwich offers a 'Switch & Fix' facility across its tracker products, which enables borrowers to switch to a Woolwich fixed rate at any time without incurring early repayment charges.
Mr Gray added that with the new offer, borrowers "retain the flexibility to switch to a fixed rate at any time should their expectations about base rate change, making this one of the most competitive packages on offer today."
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