Barclays reduced rates on some residential and buy-to-let mortgages from Tuesday (15 August). Examples include the fee-free, two-year fixed product at 85% loan-to-value (LTV), which is available for product transfer and further advance. The rate on this product has lowered from 6.96% to 6.66%.

A corresponding product which is for product transfer only has been reduced from 7.03% to 6.73%. A five-year fixed product transfer in Barclays’ reward range with no fee, also at 85% LTV, has gone down from 7.03% to 6.73%.

Justin Moy, managing director at EHF Mortgages, said it would be a “very interesting week to see if this reducing trend continues beyond the inflation figures announced. Many lenders may sit on their hands before they make any more changes, just for safety.”

Lenders ‘fighting for market position’

Rival Natwest is reducing the rates across its new business and existing customer rates by up to 0.45 percentage points from today.

The rate cuts include Natwest’s no-fee five-year fixed purchase rate at 95% LTV product which will fall from 6.84% to 6.39%.

First-time buyer products will be lowered by around 0.28%. Its five-year fixed rate purchase product at 85% LTV will go from 5.72% to 5.44% and comes with £995 fee and £250 cashback.

Ranald Mitchell, director at Charwin Private Clients, added: “Who saw this coming? It looks more and more like the bigger lenders are fighting for market position, a sure sign that they are well off their respective lending targets.

“The question is, with the likelihood of further base rate increases, is this a short-term window of opportunity for expiring fixed rates to soften the payment shock they have steaming towards them?”

Accord Mortgages, part of Yorkshire Building Society is lowering rates on selected 95% LTV products by up to 0.8% and bring out five-year fixed rates at higher LTV tiers with £2,000 cashback.

The lender’s fee-free five-year fixed rate with £2,000 cashback and free standard valuation is priced at 6.23%. The deal is available for both home movers and first-time buyers with an LTV between 85 and 90%.

This week’s mortgage rate cuts follow on from rate reductions by Nationwide reduced rates by up to 0.55%, TSB by up to 0.4% and Halifax by up to 0.71%.

Meanwhile, Skipton Building Society announced today that it has reduced rates across a series of mortgage products including its 100% loan to value (LTV) track record option. The rate of the 100% LTV product, which is open to renters and based on 12 months of rental payments, has been cut from 6.44 per cent to 6.29 per cent. 

Average rates falling

Meanwhile, the average five-year fixed rate has fallen below 6% for the first time in a month, according to Rightmove. According to the latest Rightmove figures, the average five-year fixed rate is 5.86% and the average two-year fixed rate is 6.46%.

At 60% LTV, the average two-year fixed rate is 6.13%, with the lowest rate on the market standing at 5.9%. For five-year fixed rates, the average rate is 5.53%, with the bottom rate coming to 5.28%.

Matt Smith, Rightmove’s mortgage expert, said: “Rates currently continue to move in the right direction for new borrowers, with average five-year rates dipping below 6% for the first time in a month.

“Five-year products have reduced by an average of 0.2% and two-year products have dropped by an average of 0.1% over the past week, as the full effect of recent lender rate cuts starts to hit the market.

“The market remains volatile, and things can quickly change if presented with any surprising data. However, right now, the downward trend highlights the desire from lenders to become more competitive and attract one of the many motivated buyers we can see are still active in the property market.”

Is another rate rise on the way?

Despite mortgage rates falling this week, the downward trend is unlikely to continue as industry experts are predicting that the Bank of England could be planning another rate rise.

Inflation is down to 6.8% this month but the figure is still historically high and needs to be seen in the context of stubborn core inflation, record wage inflation and surprisingly high growth figures.

Experts said the outlook was not improving rapidly enough to prevent further interest rate rise next month.