'Expect further reductions': Barclays cuts mortgage rates in move likely to be followed by other lenders

Barclays has sounded the starting gun on what is expected to be a round of fixed rate mortgage rate cuts from banks and building societies over the coming weeks

From tomorrow the lender will reduce its rates on most of its home loan products. The rate on a two year deal for borrowers with a a 10% deposit is coming down from 5.76% to 5.48%. For applicants with a larger 40% deposit the rate falls from 5.13% to 4.88% while for a 5 year fix the rate drops from 4.90% to 4.85% for borrowers with a 10% deposit.

The move follows an easing in swap rates in the City since the Bank of England’s decision to keep rates at 5.25% last week, a decision seen as a “doveish hold” that paves the way for the first cut in borrowing costs in a year in August.

Louis Mason, content and communications director at Oportfolio Mortgages, said: “This is great to see! We have lots of clients who have been literally holding their breaths for rates to come down. With the positive news about inflation, an almost certain base rate drop later in the year, and an improvement in SONIA swap rates, we are very positive about other lenders dropping their rates sooner rather than later.”

Riz Malik, director at R3 Mortgages, said: “Barclays is the first lender of the week to improve selected mortgage products but my suspicion is that it won’t be the last. Expect further reductions from other high street and specialist lenders this week given improving market pricing. The improvement in SWAPs is great news for borrowers.”