Barclays cuts mortgage rate for existing customers

by Ed Bowsher on 26 August 2010  |  0 comments
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Barclays is about to launch a new range of cheaper Woolwich mortgages for existing customers only.

lovemoney.com put out a press release yesterday saying that Barclays was about to launch a new mortgage range that would give preferential rates to existing customers. Barclays has confirmed the news today and says that is going to launch a range of ‘loyalty mortgage discounts’ of up to 0.54% for existing customers.

A non-Barclays customer can currently get a 2 year fixed rate mortgage with a 3.49% rate, but from next Wednesday existing Barclays customers will be able to get a 2.95% rate. In both examples the borrower has to have at least a 30% deposit to qualify. The fee is £999 for the 3.49% mortgage, I assume the fee will be the same on the new deal.

Barclays new rate for existing customers is very competitive. The best competitor I can spot is a 2 year fixed rate deal at 2.99% from First Direct. The fee is just £99. That’s a cracking deal but you do need a 35% deposit to qualify for this one so it won’t be a realistic option for all borrowers. 

Barclays isn’t just cutting rates on its 2 year fixed rate mortgage, but this is the only rate the bank has so far announced, so it may prove to be the most competitive.

Barclays isn’t the first bank to offer better deals for existing customers. It’s become an increasingly common trend across the industry over the last year. The banks have realised that it’s very expensive to win new customers via advertising on TV and on the web. Instead it’s cheaper to win a customer for one product and then try and sell other products to the newly won customer.

I suspect we’re going to see a lot more of this over the next couple of years. Instead of shopping around for the best individual products, we may have to look at a bank’s whole product range and choose one bank for all of our financial needs. That’s what the banks want to happen anyway......

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term may revert to the lender's standard variable rate or a tracker rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.

Your home or property may be repossessed if you do not keep up repayments on your mortgage.