Interest rates may be on hold but it has not stopped some lenders from making price cuts, with Barclays adding its name to the list today.
The mortgage lender announced it would be slashing rates tomorrow with a focus on high loan-to-value products, in a bid to support first-time buyers and those with low deposits.
Among the highlights there is a five-year fixed rate of 4.80% with no fees for those with a 5% deposit.
But it has also reduced the rate on its two-year fix for buyers with a 20% deposit to 3.98%. This one comes with an £899 fee.
Last week, on the day the Bank of England announced it was holding interest rates at 4%, Nationwide revealed it would be cutting rates by up to 0.18%. It’s lowest-priced deal now stands at 3.80%.
On the same day West Brom Building Society announced rate cuts to its shared ownership range.
However, today’s move by Barclays has been hailed as ‘significant’ by mortgage experts because it’s rare in the current environment to see an 80% loan-to-value (LTV) – a mortgage for borrowers with a 20% deposit – priced with a rate below 4%.
Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, speaking to the Newspage agency, explained: “Rates have been up and down all year, leaving borrowers frustrated by constant uncertainty.
“To see a mainstream lender dip below 4% again at this loan-to-value feels like a turning point and hopefully the start of some stability as we move towards a new normal in mortgage interest rates.”
Meanwhile, Omer Mehmet, managing director at Welling-based Trinity Finance, also speaking to Newspage, applauded the cut for the first-time buyer and low deposit market.
“Barclays trimming rates is a welcome move,” he said, “especially at higher loan-to-values where first-time buyers feel the pinch. A cut from 4.87% to 4.80% on a 95% deal may not sound seismic, but it shows lenders are sharpening their pencils as competition heats up.
“With every fraction of a percent mattering to stretched borrowers, the question now is whether other high-street banks will follow and spark a rate war.”
