Barclays has became the latest bank to undercut rivals with a market-leading mortgage rate deal. The banking giant has dropped its fixed year fixed rate to 3.96% – the lowest on the market – and is also reducing other rates by up to 0.48%. Until last week, the cheapest five year fix was offered by HSBC at 3.98%, although HSBC’s rate is only available those with an annual income of at least £100,000 paid into an HSBC Premier Bank Account or £100,00 plus in savings or investments with HSBC in the UK.
On Friday, Nationwide Building Society reduced its five year rate to 3.99%, which is available to existing customers and to new customers. The rate changes mean a borrower with an average outstanding mortgage of £132,378 could save up to £200 interest a year, if they take out a five year fixed rate with the Barclays rather than Nationwide. The five-year Barclays deal is on its Green Home mortgage with a 60% loan to value and includes a £899 product fee; Green Home mortgages are available to customers who are buying an energy-efficient new-build home directly from the builder or developer and have energy efficiency rating of 81 or above, or is in energy efficiency bands A or B.
Barclays said it had increased the maximum loan amount for 90% Loan-to-Value (LTV) purchases for houses and flats and the cap for houses has increased from £570,000 to £640,000, while the cap for flats has increased from £275,000 to £310,000.
Other deals in the refreshed range include a two-year fixed-rate mortgage for borrowers with a 10% deposit, at 4.93%, with no product fee.
Sian McIntyre, managing director of mortgages and savings at Barclays, said: “We’ve introduced several rate drops already this year across our mortgage range, making a real difference in affordability.”
On Friday, Nationwide Building Society reduced some of the rates it is offering down to 3.99%, to existing customers looking to move to a new deal and to new customers looking to remortgage.
Nationwide’s new rates include a “switcher” mortgage for existing customers coming to the end of their current mortgage deal at 3.99%, for a five-year term. Borrowers will need a 40% deposit and a £999 fee will apply.
Rachel Springall, a finance expert from Moneyfactscompare.co.uk, said: “A headline-grabbing rate is exciting, but it is essential for borrowers to assess the whole package of any deal before they commit. Some deals are also exclusive to certain customers, so it’s wise for borrowers to seek independent advice to navigate all the options available to help save them time and hassle.”
Matt Smith, a mortgage expert at Rightmove, said: “The market has settled better than expected after the unexpectedly high inflation figure.
“Average mortgage rates on many products have trickled downwards, and we’ve even seen the return of some eye-grabbing sub-4% mortgage rates for those with the biggest deposits.
“It shows that mortgage lenders are still keen to compete for business as we head into the thick of the annual spring selling season.”
