Mortgage Rate Cuts on the Horizon as Barclays Leads the Way

The UK mortgage market is bracing itself for a wave of fixed rate mortgage cuts, with Barclays taking the lead by reducing its rates on most of its home loan products from tomorrow. This move is expected to trigger a domino effect, with other banks and building societies likely to follow suit in the coming weeks.

The rate on a two-year deal for borrowers with a 10% deposit is coming down from 5.76% to 5.48%. For applicants with a larger 40% deposit, the rate falls from 5.13% to 4.88%, while for a five-year fix, the rate drops from 4.90% to 4.85% for borrowers with a 10% deposit.

Mortgage rates are set to fall in the coming weeks

The move follows an easing in swap rates in the City since the Bank of England’s decision to keep rates at 5.25% last week, a decision seen as a “doveish hold” that paves the way for the first cut in borrowing costs in a year in August.

Industry experts are optimistic about the impact of this move on the mortgage market. Louis Mason, content and communications director at Oportfolio Mortgages, said: “This is great to see! We have lots of clients who have been literally holding their breaths for rates to come down. With the positive news about inflation, an almost certain base rate drop later in the year, and an improvement in SONIA swap rates, we are very positive about other lenders dropping their rates sooner rather than later.”

Riz Malik, director at R3 Mortgages, echoed this sentiment, saying: “Barclays is the first lender of the week to improve selected mortgage products, but my suspicion is that it won’t be the last. 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.”

Mortgage applications are expected to increase as rates fall

As the mortgage market continues to evolve, borrowers are advised to keep a close eye on rate changes and to consider their options carefully. With the possibility of further rate cuts on the horizon, it may be wise to hold off on making a decision until the market settles.

In the meantime, borrowers can take advantage of the current rate reductions and explore their options with lenders. As the market continues to shift, one thing is certain - borrowers are set to benefit from the increased competition among lenders.

Home loan rates are set to fall in the coming weeks