Barclays reduces rates by up to 30bps

Could this trigger another wave of rate reductions?

Barclays reduces rates by up to 30bps

Barclays has announced reductions of up to 30 basis points (bps) on a selection of products across its residential and buy-to-let new lending and reward ranges, including two- and five-year fixes for product transfers and further advances.

From today, August 15, the lender has made some high loan-to-value (LTV) existing residential customer products available at reduced rates.

These include a two-year fixed product at 85% LTV and available for product transfers and further advances, with rates reduced from 6.96% to 6.66%. The two-year fixed and five-year reward fixed at over 85% LTV and available for product transfers are now both priced at 6.73% from 7.03 previously. All three products are fee-free and have a minimum loan of £5,000 and a maximum loan of £2 million.

Barclays’ full mortgage range, reflecting the latest rate changes, can be accessed online through its website.

With Barclays now aligning itself with other major lenders that adjusted their prices since last week – the latest of which was Santander also reducing rates by up to 29bps yesterday, brokers shared their thoughts on whether the move could trigger another wave of rate reductions.

Lewis Shaw, owner of Shaw Financial Services, said that after last week’s news of major lenders reducing rates, it was only a matter of time until Barclays joined the fray.

“Now that the big six are in the mix, it’s time for the rest of the market to jump aboard the lowering rate train,” he commented. “Expect more cuts to come if the inflation data on Wednesday is positive and bring a much-needed boost to worried mortgage holders about to face remortgaging in the coming months.”

Craig Fish, director at Lodestone Mortgages & Protection, said that while it was good to see the last of the big six reduce their rates in alignment with the other lenders, it was by no means a rate war.

“This is where the lender’s rates should have been,” he pointed out. “Having realised they aren’t writing enough business to survive, they had to adjust their rates accordingly.

“If we see some positive inflation data released this week, then I strongly suspect that we might get the first sniff of a rate war. The big question is who will be the first to jump.”

James Miles, director at The Mortgage Quarter, agreed with Fish, saying that “calling it a price battle may be a little hasty.”

“Rates still have room to drop further, and the inflation measures this week will be pivotal to see if this will continue,” Miles said.

“The Bank of England is predicting inflation to fall to 5% by the end of the year, so this should bring back some confidence for lenders and reduce the knee-jerk rate rises seemingly every week. The fight to be top of the charts is welcomed, and I can see this continue to happen.”

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