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"The mortgage market has become almost surreal"

Journalist: Riz Malik

ended 09. August 2023

Halifax has just declared updates to its product offerings that will go live from Friday, 11th August. Notably, the most significant cuts are seen in Halifax's 5-year fixed rate options. 

This move aligns the Halifax with other lenders like HSBC and TSB, which have already decreased selected rates after the latest hike in the base rate to 5.25% last week.

Brokers noted that the mortgage market has become almost surreal, as despite the fact that the base rate has just been raised to 5.25%, fixed rates are falling.

Riz Malik, director of Southend-on-Sea-based independent mortgage broker, R3 Mortgages, said: "With the Halifax, the UK's largest residential lender, adjusting its prices downwards alongside HSBC and TSB, it signals to the market that even following a base rate increase, fixed rates can drop. In that regard, the mortgage market has become almost surreal." He added: “August might emerge as the most favourable month for mortgage rates this year.”

Another broker, Rob Gill, managing director at mortgage broker Altura Mortgage Finance, suggested a rate war could be on the cards next month: “All eyes will now be on next week's inflation figure, due on August 16th. If this confirms a further fall in inflation, a mortgage price war in September cannot be ruled out as lenders seek to make up for a quiet July and August.”

Lewis Shaw, founder of Mansfield-based Shaw Financial Services, delivered much the same verdict: “After the rate reductions by HSBC and TSB, Halifax now wants in on the action, which can only be positive. It's a welcome relief to see rate reductions, and this could be the start of a price war as transaction volumes drop and mortgage lenders need to get the sharp elbows out to hit their targets.”

Ian Middlemass, Head of Operations at Chester-le-Street-based PIA Financial Solutions, concluded: “It's interesting to see Halifax making these updates to their product offerings, particularly the noticeable cuts in their 5-year fixed rate options. This move certainly reflects the shifting dynamics in the mortgage market.”

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8 responses from the Newspage community

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Ian Middlemass0
Head of Operations at Pia Financial Solutions
It's interesting to see Halifax making these updates to their product offerings, particularly the noticeable cuts in their 5-year fixed rate options. This move certainly reflects the shifting dynamics in the mortgage market. It's quite something to witness fixed rates decreasing while the base rate has just been raised to 5.25%. This situation underscores how complex and responsive the financial landscape can be. With Halifax aligning itself with other lenders like HSBC and TSB, it's clear that they're actively adapting to the recent changes. As a potential homeowner, it's heartening to see options opening up even amidst these somewhat surreal conditions. Exciting times ahead for those considering their mortgage choices.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
With Halifax, the UK's largest residential lender, adjusting its prices downwards alongside HSBC and TSB, it signals to the market that even following a base rate increase, fixed rates can drop. In that regard, the mortgage market has become almost surreal. I expect other major high-street lenders to cut rates in a similar fashion by the end of the week. Such repricing will be beneficial to thousands of households looking to renegotiate their mortgage between now and the end of the year. August might emerge as the most favourable month for mortgage rates this year.
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Rohit KohliVerified
Director at The Mortgage Stop
Yet more welcome reductions from another major lender, which will hopefully bring back some confidence from buyers and sellers in the market. I think this week's reductions following the Bank of England's increase last week indicate that confidence is growing that the base rate may be at or nearing its peak, and, hopefully, will at least push Threadneedle Street to take more of a wait-and-see approach rather than continue to push through punishing hikes. Not sure if I would call this a rate war just yet. I think this feels more like a readjustment at this stage but we would certainly be happy with more competitive pricing across lenders.
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Jamie AlexanderVerified
Mortgage Director at Alexander Southwell Mortgages
Overall this is a positive move from Halifax and several other lenders this week, although the rate reduction is not significant, it is still a move in the right direction. This rate adjustment could benefit numerous households aiming to revisit their mortgage terms before the year concludes.
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Rob Gill0
Managing Director at Altura Mortgage Finance
The forecast following last month's below-expected inflation figure was that mortgage rate cuts would follow 2-3 weeks after and we're now seeing that prediction come true. All eyes will now be on next week's inflation figure, due on August 16th. If this confirms a further fall in inflation, a mortgage price war in September cannot be ruled out as lenders seek to make up for a quiet July and August.
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Gary BoakesVerified
Director at Verve Financial
Lenders always like to be ahead of the curve and the 0.5% increase in June meant the lenders went into a panic and fully expected another 0.5% in August, so increasing rates by 1% in most cases. The good news was that due to the better forecasted core inflation results, the MPC only felt the need to increase by 0.25%, so lenders are just falling in line and reducing accordingly after their rash increases in June. Lenders could be doing more to reduce rates, but lower business means higher margins and decreasing rates too quickly affects current pipelines.
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Rhys SchofieldVerified
Brand Director at Peak Mortgages and Protection
To brokers up and down the land, it certainly looks like a corner has been turned. Clearly, it had been assumed that rates may go higher than now seems likely but with the forecasts looking a bit better I'd be expecting more rate reductions from lenders over the coming weeks.
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Joe Stallard0
Director and Advisor at House and Holiday Home Mortgages
With reports of July producing the second lowest amount of mortgage searches this year, it's not surprising that some of the bigger lenders are starting to sharpen their pricing.

There's clearly money there to lend so let's hope this continues to help out more borrowers.