Barclays has triggered a mortgage interest rate war with new rules from Thursday. From Thursday, the bank is offering buyers of a new home a five-year fixed-rate mortgage at 3.84 percent – but only if they make a down payment of 40 percent or more.
The Barclays offer comes with a fee of £899, which is also cheaper than the £999 fee on the HSBC offer. For someone with a £200,000 mortgage over 25 years, the Barclays offer would save just over £140 per year compared to the HSBC offer.
Rachel Springall, financial expert at Moneyfacts, analyzed the current state of the property market. She explained: “It’s a promising sign for borrowers that some of the country’s biggest lenders are cutting their interest rates as they face tight competition for new customers.”
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“Barclays Mortgages has undercut the competition on the initial rate, but there are certainly further rate cuts on the horizon. Swap rates (used by lenders to price deals) are lower than they were a month ago and this, coupled with the recent cut in the base rate, may encourage lenders to cut mortgage rates.
“Two weeks ago, Nationwide became the first lender to offer a sub-four per cent mortgage for the first time in months, closely followed by NatWest last week, and HSBC joined the competition this week. Borrowers who have been hesitant about remortgaging should seek advice to review the new deals available to them and settle on one that offers them the best value based on the true cost.”
“Barclays has overtaken HSBC as the best buy of the week ahead of the weekend, subject to later offers from Halifax. This move shows Barclays’ strong intentions in the market. Instead of cutting the interest rate marginally, Barclays has boldly offered a rate of 3.84 per cent, setting a new standard,” said Nick Mendes of John Charcol Brokers.
Coreco’s Andrew Montlake added: “This is a new milestone and shows that the war on mortgage rates is in full swing.”
