Barclays cuts rates on some mortgages to below 4%
Barclays, the largest UK lender, has made a significant move by cutting mortgage rates amidst the ongoing uncertainty caused by US tariff policies. This decision comes as expectations of interest rate cuts this year are on the rise due to the unpredictable nature of the global economic landscape.
The bank has reduced the rate on certain fixed-term mortgage deals to 3.99%, aligning with other lenders who have also lowered their rates this week. This move is seen as a proactive response to the potential economic slowdown that could be triggered by the tariffs imposed by US President Donald Trump on several countries.
Analysts are predicting that the Bank of England will need to reduce borrowing costs more than initially anticipated in order to stimulate economic growth and offset the impact of the trade tensions. This shift in monetary policy expectations has influenced many lenders to adjust their rates in anticipation of lower interest rates.
Barclays is offering these reduced rates on various products, including two-year and five-year fixed deals, starting from Friday. However, these competitive rates below 4% are only accessible to borrowers with a 60% loan-to-value ratio, and an £899 fee is applicable.
Other financial institutions such as Coventry Building Society, TSB, the Co-operative Bank, and Bank of Ireland have also followed suit by lowering their mortgage rates this week. According to Moneyfacts, the average two-year fixed mortgage rate decreased slightly from 5.3% to 5.29%, while the average five-year fixed rate dropped from 5.15% to 5.14%.
The Bank of England’s main interest rate currently stands at 4.5%, but with the increasing likelihood of multiple rate cuts this year, financial markets are expecting up to four reductions. The recent fluctuations in swap rates, which impact fixed-rate mortgage deals, highlight the volatility in the current market environment.
Industry experts caution that while rate cuts are imminent, mortgage rates may not decrease as significantly as anticipated. Lenders are likely to adopt a cautious approach in light of the uncertainties in the market. Hannah Bashford, a mortgage and protection adviser, noted that Barclays’ rate cuts are beneficial for homebuyers but may not extend to those seeking to re-mortgage, signaling a selective approach by lenders to support the housing market.
The evolving economic landscape, driven by geopolitical factors like trade tensions, underscores the importance of closely monitoring market developments and adapting strategies accordingly. As the financial sector navigates through these challenges, borrowers can expect to see more competitive mortgage rates and opportunities for savings in the coming months.
