Barclays rate cuts "a positive sign that lenders are starting to regain confidence"

BROKERS have welcomed rate cuts from Barclays of up to 0.1%, saying a big lender changing the recent direction of mortgage pricing as swap rates edge down has the potential to cause a ripple effect. But they warned significant cuts are unlikely with the Autumn Budget looming and that any cuts at the current time could be "a window of opportunity” for borrowers.

Barclays has announced several fixed-rate cuts for those looking to move home or buy their first home, by up to 0.1%. The new rates will go live tomorrow and include a 4.11% 5-year fixed with an £899 product fee at 60% LTV decreasing to 4.01%, and a 4.14% 5-year fixed with an £899 product fee at 75% LTV decreasing to 4.05%. 

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said the changes are a welcome reversal: "These cuts are important as they are being made by a big lender and are changing the recent direction of mortgage pricing. Rates have been steadily increasing since the end of the summer so this is a welcome reversal.

“I don't think this move in itself will make a huge difference to home movers, but if the rest of the market does similar and that's possible when a big lender moves, then it will start to make a difference.”

Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, added: "Any sign of rate cuts is welcome news, especially for homeowners and movers who’ve been waiting for some stability. Over the past few weeks, we’ve seen a clear rise in remortgage enquiries from clients wanting to lock in deals early, with many feeling uneasy about what next month’s Budget could bring. 

"While Barclays’ 0.1% reduction won’t make a huge difference on its own, it’s a positive sign that lenders are starting to regain confidence. Many of our clients are now taking this opportunity to review their options — whether that’s fixing a new rate ahead of time or exploring a potential move before any further market changes.

“Small shifts like this often mark the start of a wider trend, and it wouldn’t be surprising to see more lenders follow suit in the coming days and weeks.”

Dariusz Karpowicz, Director at Doncaster-based Albion Financial Advice said the move by barclays is more a gentle tap on the brakes rather than a handbrake turn. 

He added: "This move signals lenders are gaining confidence after weeks of rising rates since summer's end. While 0.1% won't slash your monthly payments dramatically, it could spark other lenders to follow suit.

“If you're planning a move or remortgage, now's the time to review your options before November's Budget potentially shakes things up again. Small cuts often snowball into bigger market shifts.”

Patricia McGirr, Founder at Burnley-based Repossession Rescue Network, hopes other lenders follow Barclays' lead: "With economic headwinds on a par with Storm Benjamin, anything that puts a few quid back into the pockets of borrowers will be welcomed.

"As people look with trepidation to the forthcoming Budget announcements, those looking to lock in a price and fix now will be happy for any reduction. Let’s hope other lenders follow Barclays' example."

Elliott Culley, Director at Hayling Island-based Switch Mortgage Finance, is not sure other lenders will follow suit: “A small selection of cautious rate cuts by Barclays reveals recent reductions in swap rates.

"However, lenders are currently unwilling to make larger reductions as the uncertainty surrounding the impending Budget looms large over the economy. Rate reductions should always be celebrated but it remains to be seen if another lender will be equally bold.”

Babek Ismayil, CEO at homebuying platform OneDome, said: “Every penny counts right now and some borrowers will benefit from these changes. Don't expect material cuts as the Budget is a huge unknown and many lenders will want to see what's revealed before they price.

"But cuts like this may prove to be a brief window of opportunity for some borrowers as who knows where rates could be headed by the end of next month.”