Thursday morning saw the latest salvo in the ongoing rate war as Barclays, TSB and Accord all announced rate cuts.
The headline grabbers, brokers said, were with Barclays, which revealed a 5-year fixed rate purchase mortgage up to 60% LTV at 4.39% with a £899 product fee, and a sub-5% 5-year fixed rate up to 90% LTV at 4.95%, with a £999 product fee. Meanwhile, TSB announced rate cuts of up to 0.45% while Accord announced cuts of up to 0.3%.
Brokers were unanimous in their praise of the rate cuts. Stephen Perkins, managing director at Norwich-based broker, Yellow Brick Mortgages, said: “Barclays have blown the doors off with these rates and have sent a loud and clear message to other lenders. These rate reductions are showing real intent and the highlight is the sub-5% rates at 90% loan-to-value, which shows the rate reductions are starting to filter through to those with lower deposits. That’s what’s needed to reignite the market.”
Justin Moy, managing director at Chelmsford-based broker, EHF Mortgages, was equally enthused: “More Christmas cheer from mortgage lenders who are all looking to start 2024 on the front foot. It’s interesting that the headline deals are still for purchases rather than remortgage cases, in an attempt to keep the housing market moving. Barclays are also pricing close to their best rates seen earlier in the year. The message about the base rate being ‘higher for longer’ might end up being the joke in a Christmas Cracker if these fixed rate cuts keep coming.”
Meanwhile, Riz Malik, founder at Southend-on-Sea-based broker, R3 Mortgages, said lenders are putting margins second in a bid to win business: “No one wants to be left behind in a final push for business for 2023. Considering how much some of these rates have dropped, it might be the case that lenders are prioritising applications over margin.”
Ranald Mitchell, director at Norwich-based broker, Charwin Private Clients agreed with Malik: “The current downward trajectory in mortgage rates is intensifying as competition heats up between lenders. For many coming to the end of current deals in 2024, they can feel they have dodged a bullet, with the inevitable payment shock softening as the weeks go by. Lender focus on higher loan-to-value products will eventually kick-start the first-time buyer and home mover corners of the market, and some much-needed improved pricing on buy-to-let could also reinvigorate that sector. This price war is going to continue and, dare I say it, 2024 is shaping up nicely for the property market.”
Gareth Davies, director at Southampton-based broker, South Coast Mortgage Services, was equally upbeat: “Who doesn’t love yet another rate reduction? The panic that overwhelmed the industry in the summer has now officially subsided. It may be brutally cold outside today but the mortgage thaw continues.”
Charles Breen, director at Wellingborough-based broker, Montgomery Financial, said: “It feels like someone is pouring petrol on this rate war to keep us brokers warm during such a cold snap, and about time too. The lender battle is really beginning to pick up pace at the moment. For a long time, they were issuing minuscule rate decreases but now they are being more aggressive. For the past few months, it’s almost been trench warfare with the small but incremental decreases and all of a sudden it’s building up momentum and feels like we are on the verge of a blitz of rate cuts.”
Michelle Lawson, director at Fareham-based broker, Lawson Financial added: “It’s great to see rates come down further and this should give borrowers much more confidence as we enter 2024. After a disastrous 12-18 months for the industry, it is always nice to see a glimmer of hope and, as we start to think about what 2024 holds, let’s hope this continues.”
Lewis Shaw, owner at Mansfield-based broker, Shaw Financial Services, was another broker who welcomed the news: “The rate war shows no signs of abating as lenders scrap it out for market share as we run into the quietest time of the year. With transactions set to slow in the run-up to Christmas, we should see more reductions over the next few weeks. Remember, mortgage lenders have fixed costs so they’d rather lend and make a smaller margin than not lend at all, especially as they want to get somewhere close to their lending targets. It’s now 50/50 between a white Christmas and a sub-4% mortgage deal, and either will bring some festive cheer.”
Jamie Lennox, director at Norwich-based broker, Dimora Mortgages, delivered much the same verdict: “With rates continuing to fall, the bets are now on what will be more likely, a white Christmas or a return of a 5-year fixed rate below 4%. All eyes will be on the next Bank of England meeting and providing there are no unexpected outcomes prior we could well see rates drop faster than Santa down the chimney.”
Aaron Strutt, product and communications director at Trinity Financial, concluded: “Barclays has changed its rates twice in a few days, highlighting how keen the lender is to get its phones ringing again. Lenders really are concentrating on making their property purchase rates stand out in the best buys tables and the price war between the biggest lenders is intensifying. Banks and building societies want to get the message out that rates are coming down. Incredibly, we are not far off seeing the cheapest fixed rates being a full one per cent below the Bank of England base rate.”
