Bigger rate reductions needed to really get things moving, says mortgage expert
Barclays has announced new rate reductions on Thursday, but the marginal cuts had some brokers thinking that lenders may now be waiting for this month’s inflation data before cutting more aggressively.
The high street lender reduced the rates of its 60% loan-to-value two- and five-year fixes with £999 product fee on its residential remortgage range by 10 basis points (bps), from 5.98% to 5.88% and from 5.37% to 5.27%, respectively.
The rate of its 75% LTV five-year Reward fix with a £999 product fee was cut by a smaller 5bps, from 5.39% to 5.34%.
See the latest Barclays Mortgage rates here.
“We continue to monitor our range against market conditions and are pleased to confirm we are taking advantage of recent falls in the cost of market funds by further reducing rates on a selection of products across our residential and buy-to-let new lending and Reward ranges, effective from tomorrow,” Barclays stated in an email sent to brokers.
Meanwhile, news agency Newspage sought the views of brokers on the latest rate cut made by one of the UK’s largest mortgage lenders.
“This is positive news,” remarked Ashley Thomas, director at Magni Finance. “I expect that a number of lenders will continue to reduce their rates over the next month. This a mix of lenders trying to get market share and a more positive view that we should be at the peak of the base rate soon.
“However, the reality is that a significant number of borrowers are still going to see a sharp increase in their mortgage costs, and this will remain the case for a while.”
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said that while rate reductions are always good news, lenders need to drop significantly closer to 5% “to really get things moving.”
“This is especially the case with two-year fixed rates, which most borrowers gravitate towards,” she added. “However, as long as rates continue to edge down, that can only be good news for borrowers and the broader property market.”
Justin Moy, managing director at EHF Mortgages, said these small but welcome reductions from Barclays bring them in line with the rest of the high street lenders.
“It does feel like lenders are now waiting for the next set of inflation data before they consider any larger cuts,” Moy continued. “This is rate tinkering rather than rate war.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
