Barclays has announced a major reduction in mortgage rates, becoming the first significant lender to introduce large-scale cuts since the beginning of October. This move is set to take effect from tomorrow and will see rates on several mortgage products lowered by up to 0.20 percentage points. The reduction is expected to provide much-needed relief to potential buyers entering the market and to existing homeowners looking to remortgage.
These changes come after weeks of consistent mortgage rate hikes across the market. Over the past month, the lowest five-year fixed mortgage rate has risen from 3.68% to 4.14%, while the lowest two-year fixed rate increased from 4.84% to 4.22%. This sharp rise in rates has made affordability more challenging for many borrowers, making Barclays’ decision a welcome shift in the market.
Among the updates, one notable change is to Barclays’ two-year fixed rate mortgage for those purchasing with at least a 40% deposit. This rate will be reduced from 4.33% to 4.23%, placing it as the second-lowest two-year fixed rate currently available. This adjustment is expected to enhance Barclays’ competitive positioning and attract more borrowers amid a challenging economic climate.
These rate reductions reflect a positive step for both new buyers and those seeking to refinance their homes. With affordability becoming an increasing concern due to market volatility, Barclays’ decision could signal a potential shift in the mortgage landscape, encouraging other lenders to follow suit.
Barclays is set to lower its mortgage rates further, making its offers among the most competitive on the market. From tomorrow, its lowest five-year fixed rate will drop to 4.18%, with an £899 fee, placing it as one of the most attractive options available.
Homebuyers with deposits ranging between 5% and 25% will also benefit from these adjustments. For those purchasing with a 10% deposit, the bank’s lowest five-year fixed rate will fall to 4.81%, accompanied by a £999 fee. Additionally, Barclays Premier banking customers can access an even lower rate of 4.76%.
For buyers able to provide a 25% deposit, Barclays will offer a five-year fixed rate of 4.27%, also with an £899 fee. To illustrate the potential impact, a £200,000 mortgage repaid over 25 years at this rate would result in monthly payments of £1,086.
These reductions demonstrate Barclays’ commitment to providing more affordable borrowing options for a wider range of homebuyers amidst fluctuating market conditions.
First-time buyers hoping to get onto the property ladder without a deposit may want to consider Barclays’ Springboard mortgage, which will also see a reduction in rates. This mortgage product allows family and friends to assist with the deposit by providing 10% as security for a five-year term. The money is placed into a Helpful Start account, which earns interest and is returned to the helper after five years.
From tomorrow, the Barclays Springboard deal will see rates fall from 5.86% to 5.76%, with no additional fees. This mortgage, which covers 100% of the property’s purchase price, will allow buyers purchasing a £200,000 property to pay £1,259 a month, a saving of £13 from the previous rate of £1,272.
Mortgage brokers were caught off guard by these rate cuts, especially given the series of rate hikes from major lenders in recent weeks.
Some standout reductions, according to Nicholas Mendes, mortgage technical manager at John Charcol, include a 0.10% drop in the two-year fixed rate at 90% loan-to-value (LTV) with no product fee, which will now be 5.39% instead of 5.49%. Similarly, the two-year fixed rate at 75% LTV with a £899 fee will now be 4.36%, down from 4.46%.
For those looking to remortgage, the five-year fixed rate at 60% LTV with a £999 fee has seen a significant reduction, dropping from 4.37% to 4.17%. Meanwhile, the Great Escape two-year fixed at 60% LTV with no product fee has been reduced from 4.72% to 4.62%, and this deal comes with no application, valuation, or standard legal fees.
These reductions could provide much-needed relief for homeowners and buyers alike, helping them save on their mortgage costs.
Justin Moy, managing director at EFH Mortgages, commented on Barclays’ recent announcement, stating that it came as a surprise. He noted, “This is a somewhat surprising announcement from Barclays, as the mortgage market showed little scope for any form of rate cuts before Christmas.” While he acknowledged that these reductions may not be enough to significantly stabilise the economy, he believes they will encourage borrowers and suggest that there may be improvements in the near future.
Mike Staton, director at Staton Mortgages, also weighed in, explaining that many people assume a lender’s rate increase is due to concerns about the economy. However, Staton pointed out, “Barclays is proving with this reduction that this is not always the case.” He believes Barclays is demonstrating an appetite for lending and aiming to finish 2024 on a positive note. Staton further suggested that Barclays won’t be the only lender to reduce rates before the year’s end.
Nicholas Mendes, mortgage technical manager at John Charcol, provided insight into why Barclays might have cut mortgage rates. He explained that fixed mortgage rate pricing often reflects Sonia swap rates, which indicate what lenders expect regarding future interest rates. As of 22 November, two-year swaps were at 4.12%, trending below the current base rate but in line with the lowest two-year fixed-rate deals. Mendes also noted that five-year swaps, which had risen above 4% in recent weeks, had since dropped back to 3.89%.
Mendes praised Barclays for acting quickly to reflect the improving conditions, adding, “With swap rates easing over the past couple of days, it’s great to see a lender acting quickly.” While these reductions may not drastically change the market, Mendes believes they offer some relief to borrowers, particularly following the recent trend of rising rates from high street lenders. He also suggested that if conditions remain stable, this could lead to more rate adjustments across the market.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property