Barclays Mortgage Rates Cut

by | Tuesday 25th Jun 2024 | Mortgage News

Barclays mortgage rates have reduced!

Barclays mortgage rates have reduced!

Finally, some news that we have all almost literally been holding our breaths for! Barclays Bank has announced reductions in its mortgage rates, becoming the first of the ‘Big 6’ mortgage lenders to do so after the Bank of England hit its inflation target of 2%. The big 6 lenders being Barclays, NatWest, Halifax, Nationwide, HSBC, and Santander. So named because they are the largest mortgage lenders in the UK by quite a way. Whereas smaller banks and building societies have already lowered their rates marginally, this news about Barclays is particularly interesting.

Effective tomorrow, Tuesday the 25th of June 2024, these adjustments will apply to several key products in Barclays’ Residential Purchase range.

New Barclays Mortgage Rates Details

The following changes have been detailed in Barclays’ latest announcement:

  • 2-Year Fixed, £0 Product Fee, 90% LTV: The rate will decrease from 5.76% to 5.48%. This product is available for loans ranging from £5,000 to £570,000.
  • 2-Year Fixed, £0 Product Fee, 60% LTV: The rate will drop from 5.13% to 4.88%, applicable to loans between £5,000 and £2 million.
  • 5-Year Fixed, £999 Product Fee, 90% LTV: The rate will see a slight reduction from 4.90% to 4.85%, available for loans ranging from £5,000 to £570,000.

These rate reductions are a welcome relief for many prospective homebuyers, offering more affordable borrowing options amidst a volatile economic environment.

How Does Inflation Impact Mortgage Rates

The recent announcement from the Bank of England, confirming that it has reached its 2% inflation target, is a significant factor influencing these rate cuts. Inflation rates directly impact mortgage lending as they inform the central bank’s decisions on interest rates. When inflation is high, the Bank of England typically raises interest rates to cool the economy, leading to higher mortgage rates. Conversely, achieving the inflation target suggests a stabilising economy, allowing lenders like Barclays to lower their mortgage rates.

Prospects Of A Base Rate Reduction

Speculation is growing that the Bank of England may reduce the base rate in August 2024 if inflation remains stable. A reduction in the base rate would further lower borrowing costs, benefiting new and existing mortgage holders. Lower base rates typically lead to reduced mortgage interest rates, making home loans more affordable and potentially spurring activity in the housing market.

Understanding SONIA Swap Rates And Their Impact On Mortgages

Another critical element affecting mortgage rates is the Sterling Over Night Indexed Average (SONIA) swap rates. SONIA represents the average interest rate at which banks are willing to borrow sterling overnight from other financial institutions. These rates are crucial benchmarks for pricing financial products, including mortgages. SONIA swap rates are used by lenders to manage interest rate risk. When SONIA swap rates decrease, it generally leads to lower mortgage rates as the cost for lenders to hedge their loans decreases. Conversely, an increase in SONIA swap rates can result in higher mortgage rates as the cost of hedging rises.

Barclays’ decision to reduce its mortgage rates may also reflect current trends in SONIA swap rates, which have shown stability following the Bank of England’s inflation target announcement. As these swap rates influence the funding costs for lenders, any shifts can directly impact the mortgage rates offered to consumers.

Expert Advice For Mortgage Seekers

For those in the market for a new mortgage, these changes underscore the importance of staying informed and seeking expert advice. At Oportfolio Mortgages, our team of whole-market mortgage brokers is dedicated to helping clients find the most competitive mortgage products and rates available. Whether you are a first-time buyer or looking to remortgage, our experts can guide you through the process, ensuring you make the best financial decisions.

To explore your options and secure the best mortgage deal, speak to one of our advisors at Oportfolio Mortgages today. Our commitment is to provide personalised service and expert advice to help you navigate the complexities of the mortgage market. With Barclays reducing their rates, it is only a matter of time before others follow suit in our opinion.

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