The announcement offers lower fixed-rate options for some borrowers, particularly those with larger deposits. Yet buyers entering the property market with just 5% saved will receive much smaller reductions, reflecting the risks lenders associate with mortgages covering a higher proportion of a property’s value.
Barclays Reduces Mortgage Rates Across 47 Deals
According to the Express.co.uk, Barclays is cutting rates on 47 mortgage products, including several five-year fixed-rate deals for homebuyers and customers looking to remortgage. The reductions take effect on Wednesday, 11 November, following another round of changes less than two weeks earlier.
For buyers with a 10% deposit, the bank’s fee-free five-year fixed mortgage rate falls from 5.63% to 5.28%. Customers purchasing with a 25% deposit can secure a five-year fixed rate of 4.98%, compared with the previous 5.30%.
Existing homeowners also benefit from the revised pricing. A five-year remortgage product available at 85% loan-to-value falls from 5.74% to 5.34%. Barclays has introduced a separate two-year remortgage deal for homeowners with 10% equity, priced at 5.39%.
The reductions are less substantial for buyers with the smallest deposits. Both Barclays mortgage products at 95% loan-to-value receive cuts of just 0.05 percentage points, significantly less than the reductions offered elsewhere in its purchase range.
Harry Goodliffe, director of Winchester-based HTG Mortgages, told Newspage that Barclays had reduced its five-year fixed rate for buyers with 10% deposits by 0.35 percentage points while making only minor adjustments to its 95% products.
Goodliffe attributed the difference to the financial exposure lenders face when borrowers have little equity in their homes. He also suggested that the two rounds of reductions indicated growing competition among mortgage providers.
Why Buyers With Smaller Deposits Face Higher Borrowing Costs
Mortgage specialists say the uneven reductions reflect differences in lending risk. Borrowers purchasing with a 5% deposit have a smaller equity cushion if property prices decline, leaving lenders more exposed to potential losses.
According to Stephen Perkins, managing director of Yellow Brick Mortgages, this explains why mortgages at 95% loan-to-value do not necessarily receive the same reductions as products requiring larger deposits.
Nouran Moustafa, an independent financial adviser at Roxton Wealth, described the latest changes as encouraging, particularly for customers with deposits of between 10% and 15%. She warned that further reductions would depend on favourable swap rates and wholesale funding costs.
The distinction between two-year and five-year fixed mortgages also remains relevant. A shorter agreement provides an earlier opportunity to review borrowing costs, while a five-year arrangement offers greater certainty over monthly payments.
Tracey Dixon, owner of Pure Mortgage and Protection, noted that shorter deals can involve refinancing costs and exposure to higher rates sooner. Longer fixed terms, meanwhile, may carry early repayment charges if borrowers’ circumstances change.
Mortgage advisers therefore recommend securing an affordable deal rather than relying on further reductions. For homeowners approaching the end of an existing agreement, Moustafa advises reviewing available options around six months before the current mortgage expires.
