Barclays has reduced rates on its two and five year mortgages by up to 31 basis points in a move expected to be followed by others and offer a lifeline to home buyers.
The reductions come despite the fact the Bank of England refused to cut the base rate from its 16 year high of 5.25 percent last week.
Last week inflation fell down to two percent, the lowest level in three years.
Industry experts said the fall in rates reflects the fact that swap rates, which are the interest rates at which financial institutions lend to one another, have come down in recent days.
Stephen Perkins, Managing Director at Yellow Brick Mortgages, said the cuts “will bring huge relief to borrowers across the country”.
Products with the biggest cuts include:
* Two-year fixed with £899 product fee – 60 percent loan-to-value (LTV), min loan £5k, max loan £2m – reduced from 4.98 percent to 4.67 percent
* Two-year fixed with £899 product fee – 60 percent LTV, min loan £5k, max loan £2m – reduced from 4.99 percent to 4.68 percent
* Two-year fixed with £899 product fee – 75 percent LTV with a product fee, min loan of £5k, max loan of £2m – reduced from 5.05 percent to 4.75 percent
* The lender’s largest rate cut on a five-year product is 0.18 percent, where the rate will come down to 4.23 percent
Riz Malik, Director at R3 Mortgages, welcomed the cuts saying others are likely to do the same amid massive pent-up demand from buyers.
“Barclays is the first lender of the week to improve selected mortgage products but my suspicion is that it won’t be the last,” he said.
“Expect further reductions from other high street and specialist lenders this week given improving market pricing. The improvement in SWAPs is great news for borrowers.”
Simon Bridgland, Broker/ Director at Release Freedom, told Newspage: “Barclays have launched some sizzling hot fixed rates to match the start of the long-awaited summer sun.
“More lenders will follow suit this week with their rates melting away in the heat. Things look set to heat up not just in our skies but in mortgage rates, too. Expect more lower fixed rates to continue to appear in the days ahead.”
Michelle Lawson, Director at Lawson Financial, heralded the news saying: “These are real reductions in rates, which will have significant benefits for borrowers and are not just a token gesture.”
Director at EHF Mortgages, Justin Moy, said: “Barclays have made a positive start this week, passing on Swap rate improvements to those looking to buy a new home.
“With cuts across their purchase range, it is likely that other lenders will follow a similar pattern. But keeping remortgage and existing borrowers paying higher rates won’t please the majority of borrowers.”
