This development follows a period of rising mortgage rates, where many UK borrowers have faced affordability pressures. With the end of the year approaching and the potential for further cuts on the horizon, mortgage advisors and homeowners alike are paying close attention to these changes, eager to secure the most competitive deals available.
Barclays Cuts Interest Rates on Remortgages and Existing Borrower Deals
Starting from today, Barclays has made reductions on a variety of its mortgage products, including both remortgages and deals for existing customers. For example, the bank’s 2-year fixed rate mortgage at 60% loan-to-value (LTV) with a £999 fee has dropped from 3.81% to 3.71%. This is a move designed to make home ownership more affordable for existing homeowners looking to remortgage in a competitive market.
In addition to remortgage products, Barclays has also slashed rates for its existing customer reward deals. The EMC Reward 2-year fixed rate at 60% LTV with no fee has decreased from 4.07% to 4.03%, while a similar deal at 75% LTV with a £999 fee has fallen from 3.92% to 3.81%. The bank’s 5-year fixed products have also been reduced, such as the 5-year fixed rate at 75% LTV with a £999 fee, which has dropped from 3.93% to 3.88%. These cuts signal a positive shift for homeowners facing the end of their fixed-rate deals.
This move from Barclays is a part of a broader trend in the mortgage industry. Other major banks, including Nationwide, Santander, and NatWest, have already reduced their rates in recent weeks. This competition among lenders is being driven by expectations that the Bank of England will cut the base rate in December, making borrowing cheaper in the months ahead.
The Market’s Response to Rate Cuts and the Ongoing Price War
The mortgage market is currently experiencing a period of heightened competition, with banks rushing to offer more competitive rates. According to Nick Mendes, a mortgage technical manager at John Charcol, the latest rate movements suggest the early signs of a full-scale price war among major lenders. With lenders like Santander leading the way with a standout offer at 3.51%, others are quick to follow suit, lowering their rates in an attempt to capture market share before the end of the year.
Mendes believes that while further cuts are possible, borrowers should act quickly to lock in the most competitive rates, as the pace of reductions may not continue indefinitely. He notes that if the Bank of England’s rate cut does not materialise as expected, or if monetary policy shifts in a more hawkish direction, it could reverse the current trend of falling rates. Therefore, securing a deal now could be a prudent choice for homeowners looking to stabilise their monthly repayments.
The possibility of further rate reductions also hinges on the Bank of England’s decision later this month. If the central bank does indeed reduce rates, it is expected that lenders will continue adjusting their offerings in anticipation of cheaper borrowing conditions. However, as Mendes advises, borrowers should be cautious not to assume that rates will keep falling. Acting swiftly could offer them the advantage of securing a favourable deal before the market shifts again.
