Barclays has upped the ante in the mortgage price war currently raging between banks and building societies.
Tomorrow, the mortgage lender will cut rates by up to 0.33 percentage points on a wide range of deals for both home buyers and those refinancing their mortgages.
This will result in several new best buys.
Barclays’ announcement follows a series of interest rate cuts in recent weeks.
Halifax has also announced it will cut mortgage rates by up to 0.13 percentage points on certain transactions.
New special offers: Barclays will offer some of the lowest rates on the market
Yesterday, First Direct cut some of the costs of its home loans. On Tuesday, Nationwide and Virgin Money cut rates on certain deals.
And last week, HSBC, Barclays, Yorkshire Building Society, Halifax and Santander also cut their mortgage rates.
Stephen Perkins, managing director of brokerage Yellow Brick Mortgages, told Newspage: ‘The rate cuts wheel has come back around for another spin, with Barclays announcing further rate cuts on the heels of its previous rate cuts.
“This cycle is gathering momentum ahead of an expected cut in the Bank of England’s benchmark interest rates in the near term. All borrowers will benefit from the process.”
Craig Fish, director of Lodestone Mortgages and Protection, added: ‘All lenders continue to make significant rate cuts, not only to gain a share of the increase in business that is going on, but also to reduce borrowing costs for mortgage holders.
“This is excellent news and it really does seem like a new rate war has begun.”
What are the cheapest mortgage rates?
While these rates will still seem high to many people buying or refinancing their mortgage right now, Barclays’ latest move brings the lowest rates back closer to where they were at the start of the year.
Those who buy with deposits of 40 per cent or more can now get a five-year fixed rate of 4.09 per cent with Barclays. The deal includes a fee of £899.
The next best five-year interest rate on the market is 4.2 percent, while the average five-year interest rate is 5.51 percent, according to Moneyfacts.
This means that someone buying a home with a £200,000 mortgage repaid over 25 years would expect to pay £1,066 a month under this Barclays deal.
The same person paying the average market rate would end up paying £1,229 a month, which equates to £163 more each month or £1,956 over a year.
Anyone who buys with a 25 per cent deposit will also be able to get a market-leading five-year fixed rate of 4.24 per cent with Barclays, starting tomorrow. This transaction is commission-free.
The next best 75 percent loan-to-value mortgage product on the market is offered by HSBC at 4.37 percent.
Barclays will also be offering the lowest two-year fixed-rate mortgage. Someone buying with a deposit of 40 per cent or more will be able to get a 4.52 per cent interest rate with Barclays. This carries a fee of £899.
The next lowest two-year fixed mortgage rate is Halifax’s 4.63 per cent, with a fee of £1,099.
Homeowners who are about to refinance their mortgage will also be able to benefit from Barclays’ latest changes.
Its lowest five-year fixed rate, aimed at those remortgaging and with at least 40 per cent equity in their home, will be 4.36 per cent from tomorrow, with a fee of £999.
That equals NatWest as the lowest tariff on the market. However, NatWest’s deal carries a higher fee of £1,544.
Barclays premium banking customers can get even better results. The lowest interest rate they can get from tomorrow is 4.31 per cent, with a fee of £999.
Rate cuts: Nationwide also announced it would cut mortgage rates earlier this week.
Anyone who refinances their mortgage and wants to fix it for two years will be able to get a new best buy with Barclays tomorrow, if they have at least 40 per cent equity in their home.
The lowest two-year fixed rate, aimed at those refinancing their mortgages, drops from 5.01 percent to 4.7 percent. Premier banking customers can get an even better rate and opt for a rate of 4.67 percent.
Randall Mitchell, director of brokerage Charwin Mortgages, told Newspage: “Barclays’ rate cuts are fantastic news and a continuation of the fight for top spot. With new two- and five-year fixed rates, mortgages are becoming more affordable for everyone.”
‘These changes are a great advantage for home buyers and those who wish to refinance their mortgage.’
Justin Moy, chief executive of EHF Mortgages, added: “Barclays has slashed interest rates, putting traditional lenders in a bind. Longer-term deals in particular are looking more attractive.”
Some brokers believe rates are likely to fall further in the coming weeks as lenders compete for business.
Ben Tadd, director of Lucra Mortgages, said: ‘Barclays is adding fuel to the fire by cutting rates in quick succession.
‘The other big six lenders are likely to follow suit to stay in touch at the top of the rates tables, leading to a domino effect in the market with other smaller lenders forced to act as well.’
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