Major UK lenders have initiated significant cuts to fixed mortgage rates, with some offerings now dipping below the 4% threshold. This development is attributed to global economic uncertainties, particularly following recent U.S. trade tariffs, which have influenced market expectations and led to a decline in swap rates.
Barclays has reduced its two-, three-, and five-year fixed mortgage rates to 3.99% for borrowers with a 40% deposit, marking it as the first of the major lenders to offer sub-4% rates in the current market. This move follows Coventry Building Society’s earlier reduction of its two-year fixed rate to 3.89% for those with a 35% deposit.
The recent volatility in global markets, spurred by the imposition of U.S. tariffs, has led to a decrease in Sonia swap rates, which lenders use to price fixed-rate mortgages. This has, in turn, heightened expectations for the Bank of England to implement interest rate cuts, potentially reducing the base rate from 4.5% to as low as 3.5% by the end of the year.
Industry experts suggest that Barclays’ rate cuts could trigger a broader “rate war” among lenders, as institutions compete to offer more attractive mortgage deals. However, some caution that the recent 90-day pause on U.S. tariffs may lead lenders to adopt a wait-and-see approach before making further rate adjustments.
For prospective homebuyers and those looking to remortgage, this period presents an opportunity to secure favorable rates. Financial advisors recommend acting promptly, as market conditions remain fluid and rates could fluctuate in response to ongoing economic developments.
