Barclays is set to bring welcome relief to borrowers as it prepares to cut several of its mortgage rates below 4% from Friday, in a move expected to stir further competition in the home loan market. The rate reduction comes amid growing speculation that the Bank of England may be poised to ease interest rates in response to mounting global economic uncertainty.
From Friday, Barclays will offer a two-year fixed-rate mortgage at 3.99%, down from 4.11%. The deal is available to homebuyers with a 40% deposit and carries a fee of £899. A matching five-year fixed-rate mortgage will also be introduced at 3.99%, cut from 4.12%, under the same deposit and fee conditions.
In addition, the bank is rolling out several rate reductions specifically for its Barclays Premier customers — those who meet the eligibility criteria by paying in a gross annual income of at least £75,000 or holding at least £100,000 in savings or investments with the bank.
Premier customers will now have access to a two-year fixed-rate mortgage at 3.98%, reduced from 4.10%, and a five-year fixed deal at the same rate, down from 4.11%. Both options also require a 40% deposit and come with a £899 product fee. Furthermore, a three-year fixed-rate mortgage for Premier clients will be cut from 4.32% to 3.99%, although this product carries a slightly higher fee of £999.
The reductions are expected to appeal to homeowners seeking stability amidst global economic turbulence. Market analysts suggest that these latest moves from Barclays are part of a broader trend, as lenders react to falling swap rates — the rates banks pay to borrow money over set periods — which underpin the pricing of many mortgage products.
Global uncertainty, stoked by recent geopolitical tensions and trade measures — including US President Donald Trump’s newly unveiled tariffs — has raised the possibility of economic slowdown. This has increased expectations that the Bank of England will move to lower the base rate to support the economy.
Hina Bhudia, a partner at Knight Frank Finance, commented: “Even with the president’s 90-day reprieve, risks to the growth outlook have clearly risen in the past four weeks. Swap rates have come down during that period to reflect the possibility that the Bank of England cuts rates at least two times, and very likely three times before the year is out.”
Financial planner Ian Futcher, of wealth manager Quilter, added: “As swap rates have dropped, some lenders have moved to cut mortgage rates, with more likely to follow if market conditions persist. Homeowners with variable or tracker deals could benefit further should the Bank of England act.”
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Current market data from financial information provider Moneyfacts shows the average two-year fixed-rate homeowner mortgage sat at 5.29% on Thursday morning, slightly down from 5.30% the day before. Meanwhile, the average five-year fixed-rate mortgage also dipped marginally to 5.14%, from 5.15%.
Barclays is not alone in adjusting its offerings. Earlier this week, Coventry Building Society’s broker division, Coventry for Intermediaries, launched a two-year fixed-rate mortgage at 3.89% for borrowers with a 35% deposit. The deal includes a £999 fee, signalling intensifying competition among lenders as the market adapts to shifting economic conditions.
With the cost-of-living crisis still weighing on household budgets, and borrowers hunting for greater certainty in an unpredictable economic landscape, Barclays’ move may signal the beginning of a broader shift toward more affordable mortgage products — especially if interest rates begin to ease.
For potential homebuyers and remortgagers alike, this could be a timely opportunity to lock in lower costs ahead of any further turbulence.
