Barclays had made a “bold” decision to cut mortgage rates after weeks of increases from most major lenders.
The bank has made a slew of reductions of up to 0.2 percentage points, including dropping its 5.49 per cent two-year deal for those with 10 per cent deposits from 5.49 per cent to 5.39 per cent.
Its two-year fixed rate for those with 25 per cent deposit or equity, with a £899 fee, now sits at 4.36 per cent, down from 4.46 per cent.
For the past few weeks, lenders have generally been increasing rates after economists said October’s Budget was likely to mean a higher peak for inflation.
This meant that markets began to predict that the Bank of England would cut interest rates more slowly than previously predicted.
The last mortgage rate cut from one of the big six lenders was by HSBC in early October.
Nick Mendes of John Charcol brokers described Barclays cut as a “bold move”, adding that they offered “breathing room for borrowers”.
He said: “It’s a small but positive step in the mortgage landscape, bringing a glimmer of hope to those navigating the current borrowing climate.”
But other mortgage brokers cautioned that other lenders would not necessarily follow in cutting rates.
David Hollingworth of L&C Mortgages said: “I wouldn’t like to say we’ve reached the peak and we’re heading down the other side, but the cut shows there’s still competition.
“I think we’ll see a period of small adjustments from lenders, but this is perhaps telling us that rates are stabilising.”
Mortgage rates are based on swap rates, which follow long-term predictions for where the Bank of England base rate will go in the future, and higher inflation generally means the base rate will fall at a slower rate than expected.
Economists believe interest rates are not likely to fall as fast as previously expected due to October’s Budget – which some analysts believe could be inflationary – and Donald Trump’s election as US president.
Until recently, those with large deposits were able to secure mortgage rates of below 4 per cent, but the last sub-4 per cent deal available across the UK was pulled earlier this month.
Almost all high-street lenders, including NatWest, HSBC, Santander and Barclays itself have increased rates in recent weeks.
Rates continued to rise after a higher than expected inflation announcement last week, with the headline measure of price rises climbing to 2.3 per cent.
This is despite the Bank of England cutting its base rate from 5 per cent to 4.75 per cent at the start of the month.
'President Musk' is flexing his muscles and revealing how weak Trump is