Barclays is launching a new range of home loans with a starting interest rate of under 4 percent amid expectations rates are on a downward slide through to the New Year and beyond.
The starting rate on a two-year fix for those with a large deposit of 40 percent is coming down from 4.10 percent to 3.99 percent, while other two and five year fixes will also be cheaper for new customers.
The fall is expected to trigger rivals to follow suit against the background of predictions the Bank of England could cut the base rate twice before Christmas.
Further reductions are expected next year with the potential that two year fixes could fall to around 3 percent by November next year.
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, said lenders appear to be ignoring the negative noise surrounding the Budget on Wednesday, saying the rate cut is “just what is needed to keep the property markets moving”.
Iain Swatton, Director at Exemplar Financial Services, said: “The week ahead could see lenders getting competitive, looking to stir up some much-needed action in the market.
“It’s a bit of a strategic dance as a rate war before the Budget might just be lenders trying to position themselves early, or perhaps they’re anticipating a Budget boost on the horizon.”
Emma Jones, Managing Director at Whenthebanksaysno.co.uk, said the rhetoric surround the Budget is ominous. But, she said: “If we can avoid any major fiscal fallout, and the Bank of England delivers another rate cut next month, it could yet be a strong end to the year.”
Elliott Benson, owner at Sett Mortgages, said: “Barclays have just stuck a defibrillator on the chest of the mortgage market.
“After a short period of some lenders nervously increasing rates slightly, this is a welcome change and it may just resuscitate demand during what is shaping up to be a volatile week with the Budget.”
Justin Moy, Managing Director at EHF Mortgages, said: “Borrowers with bigger deposits looking for shorter-term deals will be delighted to see sub-4 percent options back available for purchases, with remortgaging not a million miles behind.
“Will this all change after the Budget this week? This week is going to be a potential rollercoaster ride, so grab rates whilst you can just in case. Let’s hope we can ride the turbulence of the next week or so and get another rate cut from the Bank of England on November 7.”
Riz Malik, Independent Financial Adviser at R3 Wealth, said: “Barclays have bravely bucked the trend of recent rate rises before the Halloween Budget, which will be music to the ears of borrowers, many of whom are too scared to come out from behind the sofa.
“This is a lender that’s clearly keen to attract business and be poised for new enquiries once Wednesday is over, whether it is good news or bad.”
David Stirling, Independent Financial Advisor at Mint Mortgages & Protection, said: “Barclays are straight out of the traps on Monday morning in a race to hoover up some business, with the uncertainty of the next couple of weeks playing on everyone’s’ minds.”
Jack Tutton, Director at SJ Mortgages, said: “”Barclays have kicked off what could be a challeging week for people’s finances with the impending Budget with some much needed reductions. Bringing their headline rate down under 4 percent is going against what many other lenders have been doing more recently, in turn breathing some much needed positivity back into the mortgage market.”
