First-quarter figures released by banking giant Barclays this morning suggest the mortgage crisis is tightening its grip on the money sector.

Barclays, the 330-year-old UK bank, is reporting that that higher mortgage rates have constricted demand for mortgages and loans, with pre-tax profits falling to £2.3bn.

During that same period in 2023, profits came in at £2.6bn, a total that had marked the highest figure in 11 years.

Today's figures from Barclays resonate with yesterday's news of Lloyds Banking Group's posting of profits for the same period, which showed a drop from £2.3bn to £1.6bn.

From Tuesday this week, Barclays, HSBC and NatWest all raised their interest rates amid expectations that the Bank of England, which is currently hunkered down with a base 5.25% rate, will not be cutting the rate any time soon. Barclays hiked rates twice in 10 days, resulting in a 0.1% increase across its mortgage range, while NatWest's offer went up by the same amount.

Barclays' 12% profit drop came alongside a 7% income drop on UK operations, due to what the bank said was "subdued mortgage lending amid lower market demand".

But more positive general forecasting for the future of the UK economy has translated into the bank putting aside £58m to cover potential defaults. Last year, that figure was £113m.

In February, CS Venkatakrishnan, Barclays' CEO, unveiled a plan to weild £2bn worth of cost-cutting, which has raised fears of further redundancies and closures of High Street banking facilities.

The effects of banks changing their relationship with customers have been tangible in Gloucestershire and are an ongoing process. In March, Tewkesbury's former Barclays Bank became a Papa Johns pizza store, while a Lloyds Bank in Bath Road, Cheltenham, which closed in November 2021, is now set to be transformed into a church. Last August, Wotton-under-Edge said goodbye to its last bank, Lloyds, after 126 years of business.

As a move away from traditional banking though, in February this year, Barclays acquired Tesco's  banking services for £600m and transferred 2,800 staff to its payroll.

Mr Venkatakrishnan said the lender was now "focused on disciplined execution of the plan" and had achieved £200m in savings on the £1bn target for 2024.