Three major banks slash mortgage rates in ‘important’ market signal | Personal Finance | Finance

Three major high street banks have kicked off the new year by cutting mortgage rates, in what brokers say is a clear sign of where the market is heading. Barclays, Halifax and HSBC have all reduced the cost of borrowing, pushing more deals towards the mid-3% range and increasing pressure on competitors to follow.

Barclays was the latest lender to announce reductions, becoming the second major high street bank to cut rates this week after HSBC. Halifax also confirmed it will lower its purchase products from Friday, alongside reductions from BM Solutions. The cuts come as Halifax said this morning that affordability is better than it has been for a decade, helped by slowing house prices and rates edging down.

Brokers said lenders are “firmly back in competition mode” and that this could be the start of steady reductions through 2026.

Barclays will cut several of its fixed-rate products, including a two-year fix falling from 3.63% to 3.57% for buyers with a 40% deposit, with an £899 fee.

For those remortgaging at 75% loan-to-value, the bank will reduce a two-year fix from 3.82% to 3.78%, with a £999 fee.

This matches HSBC’s best buy 3.78% deal, though the latter comes with a marginally higher £1,008 fee.

Justin Moy, the Managing Director at Chelmsford-based EHF Mortgages, said the updates are positive for the market.

He added: “This is encouraging news from Barclays as the High Street wakes from its Christmas slumber. People purchasing property will see the largest cuts, with rates now in the 3.5% range for those with larger deposits.

“For those looking to remortgage, these new rates match the best currently available, which helps more borrowers take advantage of this improved pricing.”

Shaun Sturgess, the Director at Swansea-based Sturgess Mortgage Solutions, said the move sends a clear message.

He added: “Barclays cutting mortgage rates so early in 2026 is an important signal of the direction rates are headed. 

“These aren’t headline-grabbing cuts, but lenders don’t move first unless they’re confident funding costs are easing and the wider outlook is improving.”

Mr Sturgess continued: “My view is that this is the start, not the finish. I expect steady, gradual reductions through 2026 rather than sharp drops. For first-time buyers in South Wales, this opens real opportunity.”

Omer Mehmet, the Managing Director at Trinity Finance, said the cuts are unsurprising after the recent base-rate move. 

He added: “Following last month’s base rate cut and inflation once again edging down, it’s no surprise to see lenders continue to shave their rates.

“A lot of brokers are anticipating a busy first three months of the year. In part this will come due to lower rates, but there is also significant pent-up demand from transactions that were put on ice ahead of the late November Budget.”

Halifax will reduce its purchase products by up to 0.16%, while BM Solutions will cut purchase rates by up to 0.10% and remortgage products by up to 0.12%. It comes as the Lloyds Banking Group brands look to attract more buyers.

Reacting to the Halifax and BM Solutions reductions, Mr Moy said: “It’s good to see improved rates for both Home and Buy-to-Let buyers from both brands of the Lloyds Banking group, but it’s just a shame that those looking to refinance or switch products won’t see the benefit just yet.”

Riz Malik, the Director at Southend-on-Sea-based R3 Wealth, said lenders clearly want more activity. 

He added: “This is further evidence that lenders are keen for business and want to lend. All we need is the housing market to thaw following its budget hiatus and the UK can get moving again.”

Other brokers said rate cuts on both purchase and remortgage products will eventually be needed to unlock wider momentum. 

Imran Hussain, the Director at Nottingham-based Harmony Financial Services, said: “It’s encouraging to see the nation’s biggest lender start 2026 with rate reductions on purchase products, however, it would also be positive to see similar reductions applied to remortgage products.”

However, Babek Ismayil, the CEO of homebuying platform OneDome, said the market is heating up. 

He added: “These rate cuts from Halifax, BM Solutions, Barclays and HSBC show lenders are firmly back in competition mode and keen to stimulate activity on the purchase side. 

“With affordability already improving as house prices soften, even modest rate reductions can make a real difference to monthly payments and buyer confidence.”