Barclays has moved to lower mortgage pricing for first-time buyers following the Bank of England’s decision to cut the base rate to 3.75%. The change has raised expectations that more lenders could introduce cheaper deals before the year draws to a close.
Across the wider mortgage market, average fixed rates have edged down slightly. According to Uswitch data, the typical two-year fixed mortgage rate slipped to 4.59%, down from 4.66% a week earlier. Five-year fixed deals also saw a modest reduction, falling to 5.04% from 5.06%.
These headline figures are based on mortgages with a 75% loan-to-value ratio, meaning buyers need a deposit of at least 25%. While rates remain higher than pre-2022 levels, the recent movements suggest borrowing costs may be stabilising after a prolonged period of volatility.
The Bank of England’s rate cut, from 4% to 3.75%, has taken borrowing costs to their lowest point in nearly three years. Policymakers acted amid signs of slowing economic momentum, including weaker wage growth and a rise in unemployment.
Official figures show joblessness has climbed to 5.1%, its highest level in four years, while private-sector pay growth has slowed to its weakest pace since late 2020. Inflation has also eased more sharply than expected, dropping from 3.6% to 3.2% in November.
Mortgage experts say much of the rate cut had already been anticipated by financial markets, which explains why some lenders adjusted pricing ahead of the official announcement. However, inflation data will remain a key factor shaping mortgage rates in the months ahead.
Matt Smith, mortgage expert at Rightmove, noted that lenders had priced in the decision earlier in December. While the headlines may boost buyer confidence, he suggested the move alone is unlikely to trigger immediate, widespread rate reductions.
Smith added that although further cuts before Christmas are unlikely due to quieter market conditions, improving expectations for next year could encourage lenders to re-enter the market with sharper pricing in early 2026. He also expects the gap between two-year and five-year fixed deals to widen.
Karen Barrett, chief executive of Unbiased, described the base rate cut as welcome relief for households after a challenging period. She highlighted that the decision comes alongside easing inflation and earlier economic contraction ahead of the autumn budget.
Barrett also reminded borrowers approaching the end of fixed-rate deals that many lenders allow rates to be secured several months in advance. She advised seeking guidance from a qualified mortgage broker to identify the most suitable options.
Ryan McGrath of Pepper Money said the rate cut marked a shift in momentum after years of financial strain for borrowers. While tracker mortgage holders may feel immediate relief, he warned that refinancing could still bring higher payments for those rolling off historically low fixed rates.
McGrath added that demand for second-charge mortgages remains strong, as homeowners look to access equity without disturbing existing low-rate deals. Flexibility and rate protection, he said, are likely to remain priorities as the market adjusts.
Among major lenders, HSBC has kept its headline rates unchanged this week, offering competitive deals for borrowers with larger deposits. The bank has also introduced enhanced cashback incentives to help first-time buyers manage upfront costs.
NatWest has maintained its most competitive pricing, though these deals continue to require a sizeable 40% deposit. Barclays, meanwhile, has trimmed rates on selected products and expanded access to higher loan-to-value mortgages, including new-build purchases with smaller deposits.
Other lenders such as Nationwide, Halifax and Santander have largely held rates steady, while adjusting affordability criteria and income multiples to support buyers. As interest rates gradually ease, competition among lenders is expected to intensify, offering cautious optimism for both new and existing homeowners.
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