Barclays cuts mortgage prices again despite higher gilt yields

Barclays has reported a jump in its half-year profit but set aside an impairment charge of £900m (Tim Goode/PA) (PA Wire)

Barclays has become the latest lender to cut mortgage rates again, despite short gilt yields, which are a key instrument in the pricing of mortgages, rising further in recent days.

The bank, one of the UK’s “big six” mortgage lenders, announced another price cut for 52 of its products, as the top lenders continue to reduce mortgage rates.

Yet short-dated gilt yields, which often serve as an early indicator for mortgage prices as they provide a benchmark for “risk-free” lending over the same period the mortgage rate is fixed for, have risen further today to the highest point since early July.

At that time, mortgage prices were at 15-year highs, with average two-year deals getting close to 7% and five-year deals above 6.5%.

When the price cuts were announced, the two-year gilt was yielding 5.30%. The five-year yield was at 4.82%. Both yields are up today, bond dealers continue to sell gilts.

The rising yields come as City traders bet that Bank of England interest rates peak at 6%, which would be the highest level they have reached this century. A lower peak appeared a possibility last week, but expectations rose again as a speech from the US Federal Reserve chair Jerome Powell led to expectations that global rates may stay higher for longer.

According to Moneyfacts, the average two-year fixed residential mortgage rate today is 6.73%, unchanged from Friday. The average five-year fixed residential mortgage rate today is 6.21%, also unchanged.

Ashley Thomas, director of City-based mortgage broker Magni Finance, said: “Great to see another lender reduce their rates, I expect more to follow as they battle for market share.”

The full list of Barclays products being repriced is below:

• ^{· 5.85% Premier 2 Yr Fixed £899 product fee, 60% LTV, Min loan £5k, Max loan £2m, will decrease to 5.75%}

• ^{· 5.88% 2 Yr Fixed £899 product fee, 60% LTV, Min loan £5k, Max loan £2m, will decrease to 5.78%}

• ^{· 6.07% 2 Yr Fixed £0 product fee, 60% LTV, Min loan £5k, Max loan £2m, will decrease to 5.97%}

• ^{· 5.93% Premier 2 Yr Fixed £899 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 5.83%}

• ^{· 5.94% 2 Yr Fixed £899 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 5.84%}

• ^{· 6.09% 2 Yr Fixed £0 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 5.99%}

• ^{· 6.22% 2 Yr Fixed £899 product fee, 85% LTV, Min loan £5k, Max loan £2m, will decrease to 6.12%}

• ^{· 6.48% 2 Yr Fixed £0 product fee, 85% LTV, Min loan £5k, Max loan £2m, will decrease to 6.38%}

• ^{· 6.68% 2 Yr Fixed £0 product fee, 90% LTV, Min loan £5k, Max loan £570k, will decrease to 6.58%}

• ^{· 5.27% Premier 5 Yr Fixed £699 product fee, 60% LTV, Min loan £5k, Max loan £2m, will decrease to 5.17%}

• ^{· 5.27% 5 Yr Fixed £899 product fee, 60% LTV, Min loan £5k, Max loan £2m, will decrease to 5.17%}

• ^{· 5.29% 5 Yr Fixed £899 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 5.19%}

• ^{· 5.39% 5 Yr Fixed £0 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 5.29%}

• ^{· 5.53% 5 Yr Fixed £899 product fee, 85% LTV, Min loan £5k, Max loan £2m, will decrease to 5.43%}

• ^{· 5.63% 5 Yr Fixed £0 product fee, 85% LTV, Min loan £5k, Max loan £2m, will decrease to 5.53%}

• ^{· 5.70% 5 Yr Fixed £999 product fee, 90% LTV, Min loan £5k, Max loan £570k, will decrease to 5.60%}

• ^{· 5.99% Green Home 2 Yr Fixed £0 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 5.89%}

• ^{· 6.58% Green Home 2 Yr Fixed £0 product fee, 90% LTV, Min loan £5k, Max loan £570k, will decrease to 6.48%}

• ^{· 5.60% Green Home 5 Yr Fixed £999 product fee, 90% LTV, Min loan £5k, Max loan £570k, will decrease to 5.50% Remortgage Only}

• ^{· 6.10% Premier 2 Yr Fixed £999 product fee, 60% LTV, Min loan £5k, Max loan £2m, will decrease to 5.95%}

• ^{· 6.13% 2 Yr Fixed £999 product fee, 60% LTV, Min loan £5k, Max loan £2m, will decrease to 5.98%}

• ^{· 6.15% Premier 2 Yr Fixed £999 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 6.00%}

• ^{· 6.18% 2 Yr Fixed £999 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 6.03%}

• ^{· 6.47% 2 Yr Fixed £999 product fee, 85% LTV, Min loan £5k, Max loan £2m, will decrease to 6.32%}

• ^{· 6.46% Great Escape™ 2 Yr Fixed £0 product fee, 60% LTV, Min loan £50k, Max loan £2m, will decrease to 6.31%}

• ^{· 6.48% Great Escape™ 2 Yr Fixed £0 product fee, 75% LTV, Min loan £50k, Max loan £2m, will decrease to 6.33%}

• ^{· 5.52% 5 Yr Fixed £999 product fee, 60% LTV, Min loan £5k, Max loan £2m, will decrease to 5.37%}

• ^{· 5.54% 5 Yr Fixed £999 product fee, 75% LTV, Min loan £5k, Max loan £2m, will decrease to 5.39%}

• ^{· 5.78% 5 Yr Fixed £999 product fee, 85% LTV, Min loan £5k, Max loan £2m, will decrease to 5.63%}

• ^{· 5.70% Great Escape 5 Yr Fixed £0 product fee, 60% LTV, Min loan £50k, Max loan £2m, will decrease to 5.55%}

• ^{· 6.00% Great Escape 5 Yr Fixed £0 product fee, 85% LTV, Min loan £50k, Max loan £2m, will decrease to 5.85%}