The changes will apply from 15 August and be made to products for residential and buy-to-let borrowers.
Examples include the fee-free, two-year fixed product at 85 per cent loan to value (LTV), which is available for product transfer and further advance. The rate on this product has lowered from 6.96 per cent to 6.66 per cent.
A corresponding product which is for product transfer only has been reduced from 7.03 per cent to 6.73 per cent.
Both are available for loans between £5,000 and £2m.
A five-year fixed product transfer in Barclays’ reward range with no fee, also at 85 per cent LTV, has gone down from 7.03 per cent to 6.73 per cent. This is also available for loans between £5,000 and £2m.
More cuts to come
Riz Malik, founder and director at R3 Mortgages, said there appeared to be a “mortgage rate rollback” and while Barclays was late to the game, the reductions were expected.
He added: “Given the release of significant economic data this week, Barclays’ rate revision might prompt other lenders to reassess and possibly lower their rates further, especially if the market remains favourable. This is starting off to be another positive week for mortgage borrowers, even for those borrowing at higher loan to values.”
Justin Moy, managing director at EHF Mortgages, also said the action was “belated but welcome”.
He said alongside reductions from Nottingham Building Society, it would be a “very interesting week to see if this reducing trend continues beyond the inflation figures announced. Many lenders may sit on their hands before they make any more changes, just for safety.”
Ranald Mitchell, director at Charwin Private Clients, added: “Who saw this coming? It looks more and more like the bigger lenders are fighting for market position, a sure sign that they are well off their respective lending targets.
“The question is, with the likelihood of further base rate increases, is this a short-term window of opportunity for expiring fixed rates to soften the payment shock they have steaming towards them?”
No rate war yet
While some brokers speculated that this was a sign of a rate war, others said it was too soon to call.
Ben Tadd, director at Lucra Mortgages, the “mini rate war” was continuing, with Barclays being the last of the big six to reprice downwards.
“This is now likely to force smaller lenders to follow suit and drop their prices to stay in touch with the competition,” he added.
Conversely, Craig Fish, director at Lodestone Mortgages and Protection, said this was not a rate war as Barclays had now aligned itself with its peers and put pricing “where the lender’s rates should have been”.
He added: “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 and mortgage adviser at The Mortgage Quarter, agreed with Fish and said it was too early to say this was a price battle as there was still room for rates to drop further, which would be influenced by inflation data on Wednesday.
“The Bank of England is predicting inflation to fall to five per cent 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,” Miles said.
