Barclays PLC (LSE:BARC) is cutting rates on several mortgage offerings, opening the door for other lenders to follow suit.
Starting tomorrow, some of the bank's new deals include:
- A two-year fixed deal on 90% LTV at 5.48%, down from 5.76%
- A two-year fixed deal with 60% LTV at 4.88%, down from 5.13%
- Five-year fixed deal with 90% and a £999 product fee at 4.85%, down from 4.90%.
Late last year and into the early weeks of 2024, lenders were climbing over each other to cut mortgage rates and advertise their offers, as the Bank of England was expected to cut the base rate in the first half of the year.
However, February saw a reversal of this trend, as the predicted timing of a BoE rate cut was pushed back due to persistently high inflation, which led to high street banks hiking their rates back up.
But now, with inflation having fallen to 2% in May, in line with the Bank's medium-term target, economists and financial markets are more confident that a rate cut could come as soon as August.
Riz Malik at R3 Mortgages said Barclays is the first lender to improve selected mortgage products "but my suspicion is that it won't be the last."
Meanwhile, Simon Bridgland at Release Freedom said he thought the deals were "sizzling hot" and will be echoed by rival banks.
"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," he said.