Barclays follows Santander by cutting mortgage rates below 4% triggering 'domino effect'

Santander and Barclays person announced this week that it was to motorboat the caller deals connected Thursday, with borrowers capable to get owe rates beneath 4% for the archetypal clip this year

Two large major precocious thoroughfare lenders has slashed mortgage rates to beneath 4% for the archetypal clip this twelvemonth with experts predicting a "domino effect" for deals going forward.

Barclays and Santander some announced cuts to immoderate owe deals to beneath 4% this week. Santander said it was to motorboat the caller deals connected Thursday, with borrowers capable to use for 1 of 4 caller products of 2 and five-year fixed-rate deals astatine 3.99%. However, eligible borrowers volition request a 40% deposit to entree them. The deals volition beryllium disposable to some home buyers and those looking to remortgage. The lender is besides making reductions of up to 0.40 percent points connected much than 80 different owe products.

David Morris, caput of homes astatine Santander UK, said: “We’re delighted to motorboat a scope of caller products, on with complaint cuts connected our existing range, that volition marque a quality to customers crossed each signifier of the home-buying journey.”

Barclays announced complaint cuts crossed its owe scope - including a 3.99% 5-year fixed-rate merchandise astatine 60% loan-to-value (LTV) from Thursday. The lender has besides made reductions crossed its residential, buy-to-let, and remortgage products, with cuts of up to 0.40% connected selected deals.

The determination follows a chopped successful the Bank of England basal complaint past week, from 4.75% to 4.5%, fuelling hopes that contention betwixt lenders to chop owe rates could vigor up. Last week, six large lenders announced they were lowering owe rates up of the bank's Monetary Policy Committee (MPC) determination connected Thursday.

Barclays and Coventry Building Society lowered rates connected Monday, followed by Halifax, HSBC and Clydesdale Bank who made changes connected Wednesday, earlier Yorkshire Building Society lowered its rates connected Thursday erstwhile the determination was announced. Earlier this week, NatWest chopped immoderate of its owe rates by up to 0.36%, which could "trigger a domino effect crossed the lending landscape," according to Dariusz Karpowicz, manager astatine Albion Financial Advice.

In comments to Newspage today, Daniel Hobbs, CEO astatine New Leaf Distribution said the Bank's determination past week has "triggered frenzied activity" among lenders, adding: "The paralysis of the system and the interaction of the Budget yet to provender done successful earnest suggests rates could spell little successful the days and weeks ahead. January was a damp squib but February is shaping up to beryllium a period of fireworks for borrowers and the broader spot market."

Craig Fish, Director astatine Lodestone Mortgages & Protection noted that consumers could soon beryllium "sick of proceeding the words complaint war", saying: "It surely seems this is good and genuinely underway and thing we volition each perceive much of. To spot rates beneath 4% is simply a milestone, truthful let’s anticipation that swap rates proceed their downward inclination arsenic this volition pb to adjacent little rates by lenders. People tin instrumentality their location buying plans disconnected crystal arsenic the owe marketplace starts its large thaw."

Rohit Kohli, Director astatine The Mortgage Stop said the deals beneath 4% were "undoubtedly welcome" for the millions of borrowers coming disconnected fixed rates this year. However, the absorption connected little LTV customers means that the existent affordability situation - particularly for first-time buyers - remains unaddressed. He said: "While it's encouraging to spot lenders passing connected little swap rates, the astir important interaction would travel from much competitory precocious LTV deals that assistance first-time buyers get connected the spot ladder. Until we spot question successful that space, galore aspiring homeowners volition proceed to conflict with affordability."

Nicholas Mendes, Mortgage Technical Manager, astatine John Charcol, disagreed with the and says the swap marketplace does not presently enactment further cuts. He said: "Currently, 2 to 5 twelvemonth swap rates are beneath 4%, representing a notable diminution compared to this clip past month. However, with 2 twelvemonth swaps priced lone marginally beneath this level, determination is constricted scope for different lenders to comfortably travel suit.

"As such, I bash not expect galore competitors to replicate this move. Without wider marketplace support, this woody is improbable to stay disposable for agelong - truthful it’s worthy acting swiftly erstwhile opportunities similar this arise."

He noted that Tuesday saw a "flurry of lender repricing" arsenic galore lenders responded positively to the caller "downward inclination and stabilisation" successful swap rates. He added: "While determination remains sizeable statement astir the fig of complaint reductions we mightiness spot successful 2025, forecasts made astatine this signifier of the twelvemonth are often taxable to revision. New economical information and shifting planetary factors tin importantly power the outlook.

"Additionally, we are inactive assessing the afloat interaction of the caller Budget, which tin instrumentality clip to filter done the market. Its important to support successful caput that portion projections connection utile guidance, they are often adjusted arsenic caller accusation comes to light."