Barclays, one of the UK’s biggest lenders, has launched its cheapest mortgage deal in 15 years, with the average rate for two-year fixed mortgages at 2.49 percent for existing Woolwich customers and 2.54 percent for others.
This was the sixth consecutive cut by Barclays, and property experts predict a mortgage price war, as other lenders also slash mortgage rates to keep up.
Michelle Slade of Moneyfacts.com said that the “average mortgage rates stand at their lowest since Moneyfacts started recording rates in 1988.”
“In recent months lenders have clambered over each other to offer competitive deals and the move by Barclays follows similar moves by other lenders. They are acclimatised to the current market and don’t expect any imminent base rate rises.”
“As soon as a base rate rise becomes likely rates will start to rise but in the meantime rates could fall further,” she said.
“When a big lender like Barclays makes a move other major players will consider their position.”
“We could see other lenders following suit.”
Barclays has reduced its mortgage rates for the third time. Woolwich fixed and tracker mortgages declined by up to 0.50 percent, the lowest mortgage rates since 1996.
The company is also launching two FirstBuy Direct mortgages to help the government with its first-time buyer scheme.
“These latest deals provide borrowers with the opportunity to lock in at a great rate now and protect themselves against future increases,” said Andy Gray, head of mortgages at Barclays.
“This is just what borrowers need at a time when household budgets are being squeezed.”
Meanwhile, Skipton and Nationwide building societies have also slashed down their mortgage rates recently.
“It’s great news to see another lender reducing rates. The most competitive remain available to those with sizeable deposits but we are also seeing an increase in the number of mortgages available to those with smaller amounts to put down,” said Clare Francis of moneysupermarket.com.
“One factor at play is that banks and building societies are struggling to meet their lending targets because of a shortage of borrowers.”
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