Barclays and Halifax have become the latest major lender to cut mortgage rates, with experts saying businesses are in a battle to attract a small pool of customers.
Barclays has cut a range of its fixed deals, with changes including a reduction to its two-year rate for those with 40 per cent deposits – known as 60 per cent loan-to-value (LTV) deals – from 3.62 per cent to 3.57 per cent.
Meanwhile, for those remortgaging, deals include a two-year fix for those with 75 per cent LTV seeing rates drop from 3.82 per cent to 3.78 per cent.
Halifax – the UK’s biggest mortgage lender – has announced a wave of price reductions of up to 0.16 percentage points.
Both lenders’ cuts come in to effect from Friday (9 January).
Earlier this week, HSBC reduced prices and it was followed by Gen H and several smaller lenders.
Currently the cheapest deal on the market is from Santander, which is offering a two-year deal for buyers with 40 per cent deposits at 3.55 per cent while Nationwide is also offering more competitive deals.
The exact best price for individual customers will depend on whether they are buying or remortgaging, the length of time they are wanting to fix their interest rate for and the size of deposit or equity they have.
The average two-year fixed mortgage rate is 4.81 per cent whilst the five-year fixed average is 4.89 per cent, according to Moneyfacts.
Prices are currently at the lowest level they have been at since 2022 after multiple cuts to the Bank of England base rate in 2025.
Pricing is based on numerous factors, with key elements including a need to attract business and the level of swap rates – which follow predictions for where the base rate will go in the future.
There was a cut to the base rate last month – to 3.75 per cent – and some further cuts are predicted to occur this year.
At the same time, UK Finance, the trade body for the financial industry, is forecasting that the number of property transactions taking place is expected to slightly decline by 10,000 in 2026 compared to last year, and brokers say lower amounts of business available is coaxing lenders to try and attract customers.
The customer base for mortgage lenders is made up of purchase customers – those taking out a first mortgage on a property – and remortgage or refinances – deals where a customers current mortgage is ending, but they have not repaid their loan.
Nicholas Mendes, mortgage technical manager at John Charcol brokers, said: “Transaction levels remain subdued and forecasts continue to point to relatively modest sales volumes this year, meaning lenders are having to work harder to attract and retain business, particularly around refinancing.
“Lower pricing is one of the main levers available, but it is being used selectively rather than aggressively.
“Further reductions are possible over the coming weeks, but they are likely to be incremental and tactical, often focused on lower LTV lending or specific product ranges.”
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Aaron Strutt, product director at brokerage Trinity Financial, added: “With predictions of 10,000 fewer property transactions in 2026 compared to 2025 and 1.8m borrowers coming to the end of their fixed rates, competition between the lenders to issue more mortgages is likely to be even stronger this year.
“We can expect to see some more criteria easing and hopefully even cheaper fixed rates. All these price cuts so early in the year are good news for borrowers, especially those keen to get on the property ladder or remortgage.”
Experts are divided on how low rates will get in 2026, but some believe they could reach 3 per cent later in the year for those with the largest amounts of equity in their property.
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