Major Lenders Continue to Lower Mortgage Rates in Competitive Market

In an effort to capture more market share, mortgage lenders are continuing to cut borrowing rates, offering increasingly competitive deals for home movers and first-time buyers. Barclays is the latest to announce reductions, lowering rates across its fixed-rate mortgage products. The bank now offers two-year fixed deals starting at 3.99%, matching recent rate cuts from Santander for buyers with large deposits. However, unlike Santander, Barclays' best rates are only available to Premier Banking customers or buyers purchasing energy-efficient homes.

Barclays' Green Mortgage Offers

Barclays has introduced a five-year green mortgage with a 3.99% rate, available exclusively to buyers of homes with an energy Performance Certificate (EPC) rating of A or B. The deal comes with an £899 fee, significantly lower than Santander’s £1,999 fee. For buyers who do not meet these criteria, Barclays'best five-year fixed rate is 4.09% with the same £899 fee.

Other Lenders Cutting Rates

Barclays is not alone in reducing rates. Nationwide Building Society, Yorkshire Building Society, TSB, BM Solutions, Coventry Building Society, and Leeds Building Society have all made similar moves. Yorkshire Building Society now offers some of the most competitive rates, with a five-year fix at 4.1%(£995 fee) and a two-year fix at 4.23%. Leeds Building Society has slashed rates by up to 0.74%, with notable reductions in its three-year fixed deals. Buyers with a 20% deposit can now access a 4.53% rate(£1,495 fee), while those with a 15% deposit can secure 4.55%. BM Solutions(part of Lloyds Banking Group) has cut rates on its buy-to-let products. Nationwide has reduced mortgage rates by up to 0.35 percentage points and switcher rates by up to 0.13 percentage points.

Market Forces Driving Rate Adjustments

Commenting on the trend, Chris Sykes, Technical Director at mortgage broker Private Finance, explained the shift in lender strategy: "Earlier in the year, lenders were pricing mortgages while hedging against higher funding costs. Now, with market conditions changing, they must adjust rates to stay competitive and attract new borrowers. At the same time, they risk losing existing customers who may look to switch to better deals before completing their mortgage. "As lenders navigate this balance, further rate reductions could be on the horizon, providing more opportunities for homebuyers and those looking to remortgage.