Halifax cuts mortgage rates by up to 0.22% as brokers warn "this is a trickle, not a deluge"
By Douglas Patient, Head of News, Newspage ·
Halifax has cut mortgage rates by up to 0.22% today – but brokers told Newspage "this is a trickle, not a deluge".
Its remortgage products are seeing rate reductions up to 0.22% on 2, 3 and 5 year fixed products. There are rate reductions of up to 0.11% on 2 year tracker products.
While its product transfer and further advance products will see rate reductions up to 0.22% on 2 and 5 year fixed products.
Barclays is also cutting rates today across its residential purchase and remortgage ranges by up to 0.30%.
Experts say the cuts suggest lenders are competing harder for borrowers, offering some relief to homeowners facing a remortgage.
But they warn that the reductions do not necessarily mark the start of a sharp fall in mortgage rates.
They also point out that fixed rates reflect expectations for future interest rates, meaning they can fall even when the Bank of England raises its base rate.
Borrowers approaching the end of a deal are being encouraged to review their options rather than assume waiting will secure a cheaper mortgage.
Manooch Suree, Director at Uxbridge-based Zinga Financial Services, said he doesn't think it's a deluge of rate cuts.
He added: "I would say it’s targeted repricing and not a wave. Halifax’s cuts of up to 0.22% are meaningful, but other lenders are still pushing rates up, and the average two-year fix is still close to 6%.
"Why are they cutting? Easing swap rates and a fight for remortgage business. Lenders want to keep existing customers, and some are sharpening prices ahead of Thursday’s Bank of England decision.
"In terms of where rates are going? Up or sideways, not down. A base rate rise to 4% is widely expected this week, so expect bumpy rates, not a steady fall. If your deal ends in the next six months, speak to an adviser now. Lock in a rate and keep it under review. Waiting for rates to fall might not be a wise move.”
Toby Quanstrom, Director at Eastbourne-based Quanstrom Financial, said a Bank of England rate rise is no doubt coming on Thursday.
He added: "Lenders overshot in October and are now handing a little back, but this is a trickle, not a deluge. Why now? A base rate rise this Thursday is already baked into fixed pricing, so lenders have room to compete, and they are targeting remortgagers they cannot afford to lose.
"Where next? Sideways, not down. Many lenders let borrowers secure a rate up to six months ahead, so anyone with a deal ending soon may gain little by waiting."
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said competition in the market is heating up.
He added: “It’s not quite a deluge, but lenders are certainly starting to reach for the scissors. Halifax cutting by up to 0.22%, alongside recent reductions from Barclays, suggests competition is heating up again.
"That’s good news for borrowers, however I wouldn’t expect rates to fall off a cliff. After the volatility we’ve seen, this is more likely to be a bumpy staircase down than an express lift to cheaper mortgage rates and seems more like lenders fighting harder for business than the beginning of some spectacular collapse in pricing.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said the expected Bank of England base rate rise this week is already baked into the prices.
He added: “Both Halifax and Barclays have announced fixed rate cuts, as Swap rates have improved over the last few days. It's a real positive to see rates improving, and other lenders will probably follow suit this week.
"While the base rate increase is pretty much guaranteed, borrowers need to understand that fixed rates already reflect these upcoming increases, so we are likely to see a combination of rising base rate and some fixed rates reducing this week.”
