Barclays cuts rates as "unemployment data practically guarantees an August base rate cut"

BARCLAYS has today announced further cuts to its fixed rate deals, with a market-leading 3.79% fixed for two years (with a £999 Fee, at 60% LTV) for those looking to remortgage. Following the dire jobs data published this morning, brokers have said a base rate cut in August now looks guaranteed, which could ignite the property market.

Justin Moy, Managing Director at EHF Mortgages, said “these rate improvements from Barclays, which follow the dire jobs data, may be a sign of things to come. Swap rates, which fixed rate mortgages are priced off, have fallen over the past few days and the appalling jobs data published today could mean a rate cut by the Bank of England next month is now baked in."  

Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, agreed: “The latest horrendous jobs data should seal the deal on a rate cut next month. Yes, inflation has ticked up slightly, but the Bank of England must surely now focus on growth and stimulating the economy. To that end, a rate cut in August appears done and dusted, which will make for a busy few months ahead in the property market.” 

Jack Tutton, Director at SJ Mortgages, commented: “Barclays are trying to steal a march on the market ahead of the widely expected base rate cut next month. Wednesday's inflation figures may have put a dampener on a potential cut next month, but with today's grim employment figures a cut is now odds-on. The hope for mortgage holders will be that the competition in the market hots up for the rest of the summer.”

Sean Horton, Managing Director at Respect Mortgages, also said a rate cut now looks guaranteed: “Barclays has thrown down the gauntlet with these latest cuts, particularly that sub-4% remortgage rate, which puts them firmly in the spotlight. It's encouraging to see genuine competition emerge during what's traditionally a quieter summer period. The reductions reflect softer swap rates whilst today's unemployment data practically guarantees an August base rate cut. Who will be next?”

Meanwhile, Harry Goodliffe, Director at HTG Mortgages, said: “We’re officially in rate chase season. Barclays stepping in with a sub-4% remortgage deal is a clear signal that lenders are gearing up for a summer scrap over market share. With unemployment up and pressure mounting on the Bank of England, a base rate cut in August is looking more and more like a certainty. Borrowers sat on the fence should take note.”

Elliott Culley, Director at Switch Mortgage Finance, noted how only yesterday a rate cut next month was potentially off the table but now it appears to be back on: “It was only yesterday that there were worries the Bank of England may hold the base rate for another month or two, based on worrying inflation data. However with the latest jobs data fuelling fears of an economic slump, this time with rising unemployment, it appears a base rate drop is inevitable. Lenders may now become more confident in the market and Barclays have gone early and made some impressive rate reductions, which will be welcome for borrowers.”

Dariusz Karpowicz, Director at Albion Financial Advice, added: “Barclays joins the summer rate-cutting spree with another round of welcome reductions, proving that even small steps can lead to significant savings for borrowers. These latest cuts, including that eye-catching 3.79% two-year remortgage rate, suggest lenders are sensing opportunity in the current market conditions. With unemployment figures adding weight to expectations of August base rate cuts, we're witnessing what appears to be a carefully choreographed competition among high street lenders.”

Rohit Kohli, Director at The Mortgage Stop, said there’s growing pressure for a base rate cut in August. He added: “If the Bank doesn’t move, it’ll start to look more like politics than policy. Government claims of growth don’t hold up. In reality, they’re delivering decline — by the bucketload. If this continues and the Bank fails to act, Rachel Reeves will find herself even more exposed by the end of the summer recess. She may make it through to the Budget, but whether she lasts to Christmas is another matter."