BARCLAYS is the latest lender to announce mortgage rate reductions following the likes of Nationwide earlier this week, with some cuts as much as 0.66%.
From tomorrow, Thursday 9 July, Barclays is reducing rates on a selection of products across its residential purchase, remortgage and reward ranges.
The most eye-catching cut is its 5.45% two-year fixed rate at 90% Loan to Value (LTV) decreasing to 4.79%.
Its 5.50% two-year fixed rate at 95% LTV will also decrease to 5.11%, while its 5.35% Green Home two-year fixed rate at 90% LTV will decrease to 4.69%
This comes as yesterday Nationwide mortgage rates were reduced by up to 0.19% across two, three, five and ten-year fixed rate products, while rates will be cut by up to 0.12% on selected two-year tracker products.
Brokers said the cuts are good news for borrowers but said increasing volatility in the Middle East could see the current trend of rate cuts grind to a halt.
One said people holding out for cheaper rates “are playing a very dangerous game of chicken with global politics”.
More good news for borrowers
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said: “More good news for borrowers who are looking to shave a little more off their fixed rates, with some relatively minor and other sizeable cuts from Barclays.
“However, if the ceasefire in the Middle East is in trouble, that will inevitably push mortgage rates up yet again, along with other costs such as fuel.
“For those trying to time their activity with a remortgage, sharpen your pencil now and jump on, as events over the past day or two highlight how rates can be here today and gone tomorrow.”
It’s a view shared by Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, who said: “Barclays cutting rates will be welcomed by borrowers but more cuts from lenders may be on borrowed time with tensions escalating in the Middle East. The price of oil is already rising and, if that continues, lenders could pause for thought.”
Omer Mehmet, Managing Director at Welling-based Trinity Finance, also urged people to lock in rates as soon as possible: “Just as it was starting to feel that the direction of mortgage rates was down and momentum was growing, events in the Middle East once again put markets on edge.
“People holding out for lower rates need to understand that mortgage rates can rise just as quickly as they fell.”
Rohit Kohli, Director at Romsey-based The Mortgage Stop, warned against people sitting on their hands for more cuts.
He added: “Barclays has cut rates this morning, but don’t assume more are coming. These reductions were planned days ago, before Trump declared the Iran ceasefire over this morning. With tension building in the Strait of Hormuz, oil prices could rise, inflation could stick, and the case for further rate cuts weakens fast.
“This may well be one of the last cuts we see for a while. Anyone holding out for a better deal is taking a gamble. Lock something in now, and if rates improve before completion, review it then. Waiting and hoping is not a strategy.”
This could be a good week to act
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said the direction of travel is down – for now.
He added: “While Donald Trump alternates between threatening Iran and claiming personal credit for a ceasefire he may or may not have engineered, British mortgage borrowers are quietly catching a break. Swap rates have fallen, and lenders are moving fast. Barclays and Leeds Building Society are both cutting from tomorrow.
“Barclays delivers some of the bigger moves, with first time buyers at 95% LTV drop from 5.50% to 5.11%, and the Great Escape remortgage product breaks below 5% for the first time. Leeds sweeps broader, cutting across residential, buy to let and shared ownership, welcome news for landlords and shared ownership buyers who have had little to celebrate recently.
“The caveat writes itself however and this calm is potentially borrowed. If the ceasefire unravels, energy prices spike and inflation climbs, the cuts stop and the conversation reverses quickly. If your fix is ending in the next six months, this week could be a good week to act”
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, also sounded a note of caution: “If, or more accurately, when, the Middle East conflict flares back up, oil and energy markets will react instantly.
“The margins swap markets are pricing in right now will evaporate, and the pricing trajectory will reverse overnight. If customers are sitting on the fence waiting for the absolute floor of the market, they are playing a very dangerous game of chicken with global politics.
“This current window of sub-4.5% pricing feels less like a structural shift and more like a tactical clearance sale.”
Positive sign
Tracey Dixon, Buy-to-Let Mortgage Specialist & Owner at Cardiff-based Pure Mortgage and Protection, said it’s welcome news for borrowers.d
She added: “Barclays’ latest rate cuts are another positive sign for borrowers, but they aren’t a signal to sit back and wait. Markets can change quickly, particularly while global uncertainty remains. If your mortgage deal ends within the next six months, now is the time to review your options.
“Many lenders let you secure a rate in advance, with the opportunity to switch to a cheaper product if rates fall again before completion. Waiting for the absolute lowest rate can be an expensive gamble. Securing a suitable deal early gives borrowers certainty without necessarily missing out on future reductions.”
