Barclays trims mortgage rates

LONDON (Reuters) - Barclays, said it has cut the repayment rates on some of its mortgages in response to lower wholesale borrowing costs and stiffer competition.

Barclays said it was reducing from Friday the rate on its three-year fixed-rate loans, sold under its Woolwich mortgage brand, by 0.28 percentage points.

That reduces the rate on loans of up to 60 percent of the value of the underlying property to 5.69 percent, and to 6.57 percent for mortgages with a loan-to-value ratio of between 60 and 80 percent.

Several mortgage lenders have trimmed their mortgage costs in the past two months in response to a decline in the cost of interest rate swaps, used by banks to finance fixed-rate loans.

However, mortgage costs remain high, having risen sharply in the past year as banks stung by the credit crunch seek to conserve capital and protect profits.

The abrupt drying up of cheap mortgage finance has thrown a 10-year UK property boom into reverse, with lender Nationwide this week reporting a 10.5 percent fall in house prices in the year to August, the steepest decline in 18 years.

"Funding costs for fixed-rate mortgages are coming down, and competition is hotting up, so we have taken the opportunity to re-assert our position as one of the most competitive lenders in the market place," Barclays Head of Mortgage Products Chris Keane said on Friday.

(Reporting by Myles Neligan, editing by Will Waterman)