Barclays has cut its mortgage rates again — this time to as low as 3.79% — in a move brokers say could ignite a full-blown price war in the UK housing market.
From tomorrow, the bank will offer cheaper deals to borrowers with larger deposits of at least 25%. Among the changes, one rate has dropped from 4.01% to 3.79%, a significant shift for those buying or refinancing.
Mortgage experts welcomed the move, suggesting Barclays’ decision could force other big lenders to follow suit.
Justin Moy, managing director of Chelmsford-based EHF Mortgages, said the changes “could well be the start of a mini-price war,” noting that borrowers with sizeable equity or deposits now have more attractive refinancing options.
Ranald Mitchell, director of Norwich-based Charwin Mortgages, was more emphatic: “Barclays cutting rates again shows the mortgage market is in full price war mode. Competition is heating up fast, and that’s great news for buyers and those looking to remortgage.”
He added that the FCA’s recent relaxation of affordability rules would mean more borrowers can benefit from these lower deals, easing household pressures and helping first-time buyers onto the property ladder.
Other brokers echoed the sentiment, pointing to the ripple effect such cuts often have.
Stephen Perkins, managing director of Yellow Brick Mortgages, said rate cuts by one of the “top six lenders” were a clear sign that rivals will soon respond: “It is expected that other lenders should follow suit to fight for market share, which will be positive news for borrowers alongside many lenders recently increasing the amount that can affordably be borrowed.”
Pete Mugleston, managing director at onlinemortgageadvisor.co.uk, agreed that Barclays’ move sets the tone for the rest of the market: “Borrowers who held out to see if the Bank of England would cut rates have been rewarded. Barclays has moved quickly with lower rates, and when a big lender makes changes like this it often sets the tone for the rest of the market.”
The cuts come as lenders jostle for market share in a cooling property market where buyers and remortgagers have become increasingly price-sensitive.
Despite resilient summer trading, homeowners have been cautious as interest rates remain at 4% and affordability remains stretched. With other lenders expected to follow Barclays’ lead, borrowers could soon enjoy a more competitive mortgage market after months of higher costs.
