Barclays has reduced its mortgage rates, offering some of the most attractive deals for buyers with a 40% deposit on a five-year fixed term. The lender’s rate for this deposit size has dropped from 3.98% to 3.82%, making it the lowest on the market, although borrowers must pay an £899 arrangement fee.
For those looking for a fee-free option, Barclays now offers a 4% five-year fixed deal. This deal is available not only to buyers with a 40% deposit but also to those with a 25% deposit, providing more flexibility for prospective homeowners.
The recent rate cuts are part of a broader effort by lenders to stimulate borrowing amid a cooling housing market ahead of the Autumn Budget on 26 November. Earlier in the same week, several other major lenders including HSBC, Santander, TSB, NatWest, and Principality Building Society also lowered their mortgage rates.
Economists suggest that these reductions have been influenced by slower wage growth and rising unemployment. These economic factors have increased expectations that the Bank of England may cut interest rates during its December meeting.
Property portal Rightmove has reported that approximately one-third of sellers have already lowered their asking prices. This trend is partly due to speculation that the Chancellor could introduce an extra council tax surcharge for homes in bands F, G, and H.
In response to these market conditions, lenders appear keen to remain competitive and encourage borrowing. The reductions by Barclays and other banks reflect a strategic effort to attract buyers before the Budget potentially affects property demand further.
Experts in the mortgage sector highlight that Barclays’ cuts are not minor adjustments. Nicholas Mendes, mortgage technical manager at John Charcol, emphasises that rate reductions across multiple loan-to-value tiers signal a deliberate attempt to generate market momentum.
Harps Garcha, director at London-based broker Brooklyns Financial, notes that the timing of the rate cuts coincides with pre-Budget drops in house prices. This suggests that lenders are using competitive pricing to counteract slowing buyer activity.
Barclays has also extended its cuts to buyers with smaller deposits. Rates for five-year fixes have been lowered for those with deposits of 5%, 10%, and 15%, ensuring more prospective buyers can benefit from reduced borrowing costs.
Specifically, a 15% deposit now attracts a 4.03% five-year fixed rate without fees, which is considered highly competitive in the current market. Borrowers are advised to compare products carefully, as deals with higher rates but no fees can sometimes be more cost-effective than lower rates with large upfront charges.
Other lenders are following similar strategies. Skipton Building Society, for example, plans to reduce rates on both two- and five-year fixes across all deposit sizes starting immediately, demonstrating the sector-wide push to attract borrowers.
These moves come as the housing market faces uncertainty. Slower buyer demand and concerns over potential tax increases have led banks to respond with incentives such as reduced mortgage rates to maintain market activity.
The pre-Budget climate has also contributed to shifts in buyer behaviour. Many prospective homeowners are cautious, waiting to see whether the Chancellor’s policies will impact affordability and overall housing costs.
For buyers with larger deposits, Barclays’ reduced rates offer an opportunity to secure competitive mortgage deals in a market where fixed rates remain historically high compared with previous decades.
Overall, Barclays’ rate cuts, along with similar reductions from other lenders, reflect a strategy aimed at boosting borrowing and maintaining competitiveness. As the property market navigates economic pressures and uncertainty around the Budget, lenders are prioritising attractive deals to appeal to prospective buyers.
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