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  • Barclays now offers a sub-4% rate for those buying with a 20% deposit 

By ED MAGNUS, SENIOR THIS IS MONEY REPORTER

Updated:

Barclays has cut mortgage rates for home buyers with smaller deposits.

The high street bank is now offering the only sub-4 per cent deal on the market for someone buying with a 20 per cent deposit.  

Barclays has lowered its two-year fixed rate for buyers with a 20 per cent deposit to 3.98 per cent, with a £899 fee attached.

On a £200,000 mortgage being repaid over 25 years that would mean paying £1,058 a month. 

The next best deal on the market is offered by Yorkshire Building Society - currently 4.05 per cent with a £995 fee. 

Barclays has lowered its mortgage rates aimed at those buying homes with deposits of 5% to 20% of the purchase price

As for those buying with a 5 per cent deposit Barclays is now offering a 4.8 per cent five-year deal, with no fee attached.

On a £200,000 mortgage being repaid over 25 years that would cost £1,146 a month.

There are slightly lower rates on offer elsewhere, though. Halifax and Lloyds Bank both offer a 95 per cent mortgage deal at 4.77 per cent, albeit with £1,000 fees attached.

As for those with a 10 per cent deposit, it's now possible to get a 4.28 per cent two-year deal with Barclays, with an £899 fee.

Babek Ismayil, chief executive of homebuying platform OneDome said: 'A sub-4 per cent mortgage for borrowers at 80 per cent loan-to-value is encouraging and suggests lenders are doing their best to get the market firing after the summer lull. 

'Even small cuts can generate important savings for borrowers at a time when finances are stretched and affordability is a struggle.'

Aaron Strutt, product and communications director at London-based Trinity Financial hopes the rate cuts will breathe some life back into the market.

'Some of the best buy rates are coming back down again, which is welcome news given that more price hikes had been predicted. 

'Nationwide and Halifax have already lowered their prices so Barclays is probably reacting to their changes.

'The upcoming Budget seems to have taken some of the heat out of the property market, so once again rates need to drop to liven things up.'

How to find a new mortgage

Borrowers who need a mortgage because their current fixed rate deal is ending, or they are buying a home, should explore their options as soon as possible. 

Buy-to-let landlords should also act as soon as they can. 

Quick mortgage finder links with This is Money's partner L&C

> Mortgage rates calculator

> Find the right mortgage for you 

What if I need to remortgage? 

Borrowers should compare rates, speak to a mortgage broker and be prepared to act.

Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it.

Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying expensive arrangement fees.

Keep in mind that by doing this and not clearing the fee on completion, interest will be paid on the fee amount over the entire term of the loan, so this may not be the best option for everyone. 

What if I am buying a home? 

Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. 

Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people's borrowing ability and buying power.

What about buy-to-let landlords?

Buy-to-let landlords with interest-only mortgages will see a greater jump in monthly costs than homeowners on residential mortgages.

This makes remortgaging in plenty of time essential and our partner L&C can help with buy-to-let mortgages too. 

How to compare mortgage costs 

The best way to compare mortgage costs and find the right deal for you is to speak to a broker.

This is Money has a long-standing partnership with fee-free broker L&C, to provide you with fee-free expert mortgage advice.

Interested in seeing today’s best mortgage rates? Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.

If you’re ready to find your next mortgage, why not use L&C’s online Mortgage Finder. It will search 1,000’s of deals from more than 90 different lenders to discover the best deal for you.

> Find your best mortgage deal with This is Money and L&C

Be aware that rates can change quickly, however, and so if you need a mortgage or want to compare rates, speak to L&C as soon as possible, so they can help you find the right mortgage for you. 

Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage 

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