Halifax Intermediaries rate rises

It is unsurprising that rates are increasing to this level when 5-year SWAPs (the market cost of fixed money) have gone from 0.511% last year to 2.747% (up from 2.152% one month ago). Halifax's current 5-year remortgage rate at 2.71% is less than the market cost hence their need to increase rates. Market forces are at play and lenders are repricing with large increases to avoid being caught out and ensure products are profitable, or indeed not loss-making.

Like frogs in hot water you tend not to notice small increments but this data shines a light on what rates have done in the past 12 months. It shows why acting early to secure a new deal six months before your current one expires is the way to go.

Halifax has been higher up the 'Best Buy' tables than usual recently so these new rates look like repositioning rather than a reaction to moves in base rate. This is not an uncommon strategy for lenders who become market leaders for a period time. After a while they tend to pull back and let business levels settle.

The Bank of England is walking a high-rise tightrope with base rate increases. It's questionable how much further they can go before house prices start heading south. Many homeowners will need to remortgage over the next 12 months, and a much higher mortgage payment on top of all the other price hikes could be the final straw.

Given the rates banks were offering this time last year, they certainly hadn't forecasted to be where we are now. The pace at which lenders are increasing rates will be alarming for homeowners needing to renew their mortgage in the coming months, and there is no sign of a slowdown in sight. Many people will be coming off deals that are extremely low, which will lead to financial worries in the vast majority of households.

There are many customers of ours for whom the current environment is virgin territory and may be concerned by the speed of rate rises. When I started in the industry, the interest rate at the mortgage lender I was working for was 15.75%. That is no solace for those borrowers looking at reviewing their ultra-low fixed rate deals in 2022, but, we have seen far, far worse. I am afraid that what some saw at the start of year is now coming to fruition and this is the start of a period of difficulty for many. Borrowers should be looking at their options, understanding their budgets and planning for the next few years. That will mean there will be tough lifestyle decisions to make for some. It is not a time to think it will blow over.

Unfortunately this is what many borrowers feared. The Bank of England increases rates by a modest 0.25% and lenders jump far further. For some, this will make swapping lenders an impossibility due to affordability, which is also why we are seeing more and more borrowers desperate for a longer term fixed deal as the near future promises more misery.