Fancy a two-year fix at 3.75%? Barclays has lowered its mortgage rates again! Trinity Financial's Aaron Strutt discusses how Barclays for Intermediaries is the latest major bank to lower its mortgage rates as fixed rates continue to become more competitively priced.
The bank has introduced a two-year fix at 3.75% available to borrowers purchasing a property. It has an £899 arrangement fee and applicants will need a 40% deposit. It is worth noting rates are not much more expensive if you have a smaller deposit. The mortgage is available to Barclays Premier customers and to qualify applicants will need an annual income of at least £75,000 or have £100,000 in savings with the bank. The two-year fix for non-premier customers is only 0.01% higher and the maximum loan size is £2,000,000.
The cheapest two-year fixes are still more competitively priced than many of the three and five-year fixes which are also available below 4%. Two-year fixes are still popular as many people still think rates will be lower in a few years' time.
Will fixed rates get cheaper soon?
The Bank of England base rate was expected to reduce to 4% early next month but the latest inflation rise to 3.6% has put this move in doubt. Although recent data on unemployment may also make a difference to the decision. While a base rate reduction does not necessarily mean fixed rates will decrease, it does help to give the money markets more confidence. For the moment, if you can get a sub-4% mortgage rate, you are still getting good value for money.
Representative example: A capital and interest mortgage of £400,000 payable over 30 years, initially on a fixed rate basis at 3.75% until 30/09/2027 and then on the lender's 6.24% standard variable rate for the remaining 28 years. The 3.75% rate would require 25 monthly repayments of £1,852.46 followed by 335 payments of £2,425.46. The total amount repayable would be £859,970.67. This amount is illustrative and may vary, made up of the loan amount, plus interest £458,840.83) and £899 (product fee), £80 (final repayment charge), £35 (completion fee). The overall cost for comparison is 6% APRC representative.
Chancellor Rachel Reeves confirms mortgage changes in Mansion House speech
Chancellor Rachel Reeves confirmed in her Mansion House speech that new mortgage rules, including changes to loan-to-income limits, are being implemented immediately. As part of the change lenders will be able to offer more income stretch mortgages, which means tens of thousands more people should be able to get a mortgage in the next few years.
The Chancellor said that she is raising the capital requirements asset thresholds to allow UK banks to lend more, which should “benefit the challenger banks and bring increased competition and innovation to the market.”
Rachel Reeves is also implementing lower capital requirements as part of changes to the Basel 3.1 rules for domestically focused banks, effective from January 2027, as they also aim to attract more international banks. Ringfencing rules are also being revised to address inefficiencies and promote growth.
Mortgage lenders improving affordability calculations
The mortgage market is opening up and there is a lot of choice for borrowers planning to move home or get on the property ladder. A host of mortgage lenders have improved their mortgage affordability calculations in a bid to offer more generous loan sizes. Nationwide is offering up to six times salary mortgages via its Helping Hand scheme to first time buyers providing they earn £30,000. Coventry and TSB have eased their mortgage stress tests potentially meaning many applicants will be able to borrow up to £35,000 more while Accord is offering additional five and 5.5 times salary mortgages.
One of the biggest announcements last week came from Lloyds Banking Group, which confirmed that it will make an additional £4 billion of lending available to first-time buyers seeking high loan-to-income multiples.
Contact Trinity’s brokers. At Trinity Financial, we help all types of borrowers, from first-time and next-time buyers to business owners and international clients seeking £1 million+ mortgages. We are keen to work with more Winkworth branches and buyers buying through Winkworth. Book a mortgage consultation by calling 020 7267 9399 or emailing [email protected].
