War for customers heats up as rates plummet
Barclays has announced a significant move in the mortgage market by reducing its fixed-rate deals for new customers, with cuts of up to 0.34 percentage points. The bank now offers a market-leading five-year fixed-rate mortgage at 3.71. This move follows similar rate cuts by Nationwide Building Society, which also introduced a five-year deal at 3.74%.
Barclays' new offer has a distinct edge over Nationwide’s in some respects, as it comes with a lower fee of £899 compared to Nationwide's £1,499. Additionally, Barclays’ offer is accessible on loans starting from as little as £5,000, while Nationwide’s deal is only available on loans of £300,000 or more. Both lenders, however, require a 40% deposit for these deals. Premier banking customers at Barclays can secure an even lower rate of 3.70% for a similar five-year mortgage.
Many of Barclays’ rate cuts, effective from 25 September, focus on mortgages for its Premier banking customers and its green mortgage range, designed for energy-efficient homes with a rating of A or B. For example, Barclays is offering a five-year fixed-rate mortgage at 4.60% with a £999 fee for Premier customers with a 10% deposit, a deal that is expected to attract first-time buyers. Additionally, the bank has introduced a two-year fixed deal for its green mortgages at 4.33%, requiring a 40% deposit and no fees.
This increased focus on first-time buyers follows broader market efforts to make homeownership more accessible. Just yesterday, Nationwide confirmed that it would lend up to six times household income for first-time buyers, even for those with only a 5% deposit. Halifax also recently reduced its minimum household income requirement to borrow 5.5 times income from £75,000 to £50,000, provided borrowers have a 10% deposit.
Meanwhile, MPowered Mortgages has joined the competition, cutting rates across its fixed-rate deals by up to 0.1 percentage points. For example, the lender now offers a three-year fixed deal at 3.91% with a £999 fee for borrowers with a 40% deposit.
Commenting on the wave of rate reductions to Forbes, Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “No sooner does one lender offer a sub-3.75% five-year fix, then another joins the fray, with Barclays launching a market-leading 3.71%. The clear direction of traffic for mortgage rates is downwards, with lenders gently easing pricing as they compete for business.”
