Barclays makes huge change impacting tens of thousands

Barclays has announced a cut in mortgage rates across its product range, marking the first major lender to do so since the beginning of October. The renowned high street bank has reduced rates by up to 0.20 percentage points starting today, in a move that is expected to benefit both first-time buyers and those looking to re-mortgage.

Barclays attributed this decision to a "volatile" period in the swap rate market, which influences how mortgages are priced. Just last month, the Bank of England dropped its base interest rate by 0.25 percentage points down to 4.75%, marking it the second reduction this year.

Yet, despite this, many leading lenders have boosted a selection of their mortgage rates due to the swap rate situation. Since October started, we've seen the lowest five-year fixed rate jump from 3.68% to 4.14%, while the cheapest two-year fix has escalated from 4.84% to 4.22%.

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Owing to this market volatility, financial experts now anticipate a more gradual decrease in rates than previously thought. On the subject of these rate reductions, Barclays' head of mortgage and savings, Mark Arnold, expressed: "I'm delighted we're able to decrease core mortgage rates again after what has been a very volatile period in the swap markets. As we have done during the course of this year, when we see an opportunity in the swap markets, we will act swiftly to pass on the benefit to our mortgage customers."

Barclays has announced rate reductions effective from today, with its lowest two-year fixed-rate mortgage for buyers with a minimum 40% deposit now standing at 4.23%, down from 4.33%. The bank has also slashed its lowest five-year fixed rate to 4.18%, accompanied by an £899 fee, reports the Mirror.

First-time buyers holding deposits between 5% and 25% will also feel the positive impact of the cuts as Barclays' most competitive five-year fix for those with a 10% deposit is now set at 4.81%, requiring a £999 fee. Those with a 25% deposit can secure a rate of 4.27%, with an £899 fee.

Additionally, rates on Barclays' innovative Springboard mortgages are seeing a decrease today. This scheme, which involves family and friends supporting the buyer's deposit, asks a 'helper' to provide a 10% security deposit for five years, earning interest in a Helpful Start account and is returned at the end of the term.

The product allows buyers to receive a mortgage covering the entire purchase price and will see rates drop from 5.86% to 5.76%.

The industry was taken by surprise by Barclays' decision. Nicholas Mendes, mortgage technical manager at John Charcol, mentioned: "Barclays has made a bold move as the first high street lender to cut mortgage rates in response to recent market changes. With swap rates easing over the past couple of days, it's great to see a lender acting quickly to reflect the slightly improving conditions."

Nicholas highlighted some of the "standouts" for these cuts, including Barclay's reduction to its two-year fixed at 90% loan-to-value (LTV) with no product fee, dropping from 5.49% to 5.39%. Another was its two-year fixed at 75% LTV with a £899 fee which now sits at 4.36% - down from 4.46%.

He explained: "On the re-mortgage side, the five-year fixed at 60 per cent LTV with a £999 fee has seen a notable cut, going 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%. You won't have to pay any application, valuation or standard legal fees on this deal. Justin Moy, managing director at EFH Mortgages also noted that the move was a " Justin Moy, managing director at EFH Mortgages also noted that the move was a "somewhat surprising announcement" from Barclays. He added: "Whilst these reductions are not going to be enough to tip the economy back on an even keel, they will be encouraging to borrowers and suggest that improvements may be on the horizon."

Mike Staton, director at Staton Mortgages said the lender was "proving" common assumptions about the mortgage industry wrong.

He said: "Most people make the assumption that a rate increase by a lender is because they fear the current economic situation. Barclays is proving with this reduction that this is not always the case."

"Barclays have an appetite for lending and want to finish 2024 on a high. They won't be the only lender that reduces rates before the end of this year."