Halifax ups selected remo rates

This is absolute carnage. Halifax has decided to perhaps effectively price itself out of the market to protect its loan book and current obligations to its existing savers and borrowers. This is the new normal, with no apparent end in sight, unless the Bank of England starts lowering the base rate, which looks unlikely.

Such moves, coming days after the government's much-publicised Mortgage Charter, are a bit like an Aussie cricketer, namely within the letter of the law but probably not the spirit. Halifax now has a big discrepancy between their purchase rates and those for remortgage. They've also dramatically increased their Product Transfer rates for existing client switches.

Welcome to the new normal. We are seeing similar rises from lenders across the board. These rates feel brutal at the moment, but in a couple of months we will look back and consider them a good deal. Much like looking back to February and March time now.

There will be downward pressure on property prices as upward pressure continues on rates. We are undoubtedly going to see a slow down in property and mortgage market activity whilst consumers adjust. However, we do need to remember that a 20% drop in house prices will only push their value back two years or so and approved mortgages have been stress tested on rates still higher than these new fixed rates. So while it might feel tough, these loans have been deemed affordable. Hopefully, we are coming to the end of the current hump in rates and by late August or September we will see better news on inflation and rates will start to cool. Borrowers need to focus on the payment not the rate and, if they are worried, speak with a mortgage adviser and their lender.

Short-term swap rates continue their seemingly inexorable rise, and this is making two-year fixes particularly expensive. Halifax's 60% LTV 2-year remortgage deal is an eye-watering 6.52%. That's with no product fee; their £999 product fee equivalent is cheaper at 6.21%. Halifax could be repricing as they are swamped with remortgage applications and need to slow business down to manageable levels. But until the inflation figures improve, expect other lenders to follow suit.

I'm afraid to say that we are at the beginning of a domino effect. Now that Halifax has announced these sky-high rates, it's only a matter of time before other mainstream lenders follow suit. I'm now thinking that rates of 7%, before the summer is out, was a conservative estimate. I would urge borrowers to consider specialist lenders. They are often more flexible in their lending criteria and look at the bigger picture. Explore all lending avenues and a professional, independent mortgage adviser will help you to do this. Only yesterday, I was able to find a 2-year fixed rate at 5.28%, up to 75% LTV, on loans up to £1m.