Barclays has become the biggest UK lender so far to cut mortgage rates as the continued uncertainty caused by US tariff policy raises expectations of interest rate cuts this year.
Barclays is reducing the rate on certain fixed-term deals to 3.99%, joining several other lenders who have cut mortgage rates this week.
US President Donald Trump has brought in import taxes on dozens of countries since re-entering the White House, although on Wednesday he paused the higher rate on some of them.
But concerns that tariffs may cause an economic slowdown has led to many analysts predicting the Bank of England will reduce borrowing costs by more than expected this year in order to boost growth.
Barclays is cutting rates on several of its products, including its two-year and five-year fixed deals, from Friday.
However, these fixed rates of below 4% are only available to borrowers with a 60% loan-to-value and an £899 fee applies.
Coventry Building Society, TSB, the Co-operative Bank and Bank of Ireland are among those to have cut rates this week.
According to the financial data company Moneyfacts, the average two-year fixed mortgage rate ticked down on Thursday from 5.3% to 5.29%. The average five-year fix dipped from 5.15% to 5.14%.
The Bank of England’s main interest rate currently stands at 4.5%. Up until the last few days, most analysts had been expecting the central bank to cut that twice this year.
But after Trump announced bigger-than-expected tariffs on a number of countries, financial markets now predict four cuts.
So-called swap rates, which influence the price of fixed-rate mortgage deals, have been falling in recent days. However, they bounced back slightly on Thursday following the pause on some of the steepest tariffs.
Andrew Montlake, chief executive of Coreco mortgage brokers, said it showed how volatile markets are at present.
While he would like to see more lenders offer cheaper deals, “lenders may well prefer to adopt more of a wait and see approach,” he said.
“Rate cuts are on the cards, with the Bank of England expected to cut further in May, but mortgage rates may not fall quite as much as some are predicting.
“Trying to play the market in this environment is fraught with danger,” he added.
Hannah Bashford, mortgage and protection adviser at Model Financial Solutions, said that while Barclays’ cuts were “a very positive step” for borrowers, the sub-4% rates it was offering were for purchases and not for people looking to re-mortgage.
“This is a signal that the lenders are still trying to keep the housing market alive but are keeping re-mortgage customers out in the cold,” she said.
