Barclays makes huge change impacting tens of thousands of homeowners

The high street bank has reduced rates by as much as 0.20 percentage points from today, with the changes set to benefit both first-time buyers and those looking to remortgage

Barclays slashes mortgage rates across its product range - and is the first major lender to do so since early October.

The high street bank has reduced rates by as much as 0.20 percentage points from today, with the changes set to benefit both first-time buyers and those looking to remortgage. Barclays said the move followed a “volatile” period in the swap rate market - these are used by lenders to price mortgages.

Last month, the Bank of England cut its base interest rate by 0.25 percentage points to 4.75%. This was the second time this year that interest rates had been cut. However, in recent weeks, major lenders have been hiking a selection of mortgage rates, citing the swap rate environment.

Since the start of October, the lowest five-year fixed rate has gone from 3.68% to 4.14%, while the lowest two-year fix has risen from 4.84% to 4.22%. Due to the market, finance experts are now expecting rates to reduce more gradually than previously expected.

On the cuts, Mark Arnold, head of mortgage and savings at Barclays, said: “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.”

From today, Barclays' lowest two-year fix for those buying with at least a 40% deposit has reduced from 4.33% to 4.23%. The bank's lowest five-year fix has fallen to 4.18%, with an £899 fee.

First time buyers with deposits of between 5% and 25% will also benefit from the cuts today as Barclays lowest five-year fix for those with a 10% deposit has dropped to 4.81% with a £999 fee. Those buying with a 25% deposit will be able to secure a rate of 4.27% with a £899 fee.

Alongside these, Barclays' Springboard mortgages have also see rates fall today. This product requires family and friends to help with the deposit. The helper provides a 10% deposit as security for five years, which is placed into a Helpful Start account that earns interest and is returned after five years. The deal, which offers a mortgage covering 100% of the purchase price, will see rates fall from 5.86% to 5.76%.

Nicholas Mendes, mortgage technical manager at John Charcol said the move was a shock to many in the industry. He added: "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 says some of the "standouts" for these cuts included 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 remortgage 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 "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."