Woolwich cuts buy-to-let mortgage rates

Woolwich has become the latest lender to cut interest rates on mortgage borrowing, clipping the cost of borrowing on some buy-to-let products.

The bank – which operates as the mortgage arm of the larger Barclays Bank – confirmed in a statement its portfolio lifetime tracker mortgage would see rates reduced by 0.40 per cent, while the five year fixed-rate mortgage will be reduced by 0.50 per cent.

"We've been able to make these reductions thanks to solid improvements in Swap rates," said Andy Gray, head of mortgages for Woolwich.

"Thanks to these improvements, last week we launched market leading fixed and tracker residential mortgages.

"Now better Swap rates have enabled us to substantially reduce rates on some of our most popular buy-to-let mortgages."

Swap rates measure the cost of borrowing between financial institutions. Following the credit crunch liquidity became increasingly scarce, forcing up Swap rates as banks held onto funds.

It, however, appears pressure may have been easing in recent weeks, with a number of lenders – including Abbey, Nationwide and Alliance & Leicester – all cutting rates.

Both of the new Woolwich products will have a maximum loan-to-value (LTV) ratio of 75 per cent.

Furthermore, Woolwich has confirmed both products will be available at the same rates through intermediaries and direct from the bank.

"The rate change is good news for the less experienced buy-to-let investor," concluded Mr Gray.

"Much more than professional landlords, they have been deterred from taking part in the market by recent credit conditions."

Chris O'Toole