Halifax has cut mortgage rates by up to 0.22% from today, with reductions across its remortgage, product transfer and further advance ranges. The move comes as Barclays also reduces rates on its residential purchase and remortgage products by up to 0.30%.
Brokers told Newspage that the cuts represent "a trickle, not a deluge," suggesting lenders are competing harder for borrowers while offering some relief to homeowners facing a remortgage.
Rate reductions across products
Halifax's remortgage products are seeing rate reductions of up to 0.22% on two, three and five-year fixed products. There are reductions of up to 0.11% on two-year tracker products, while product transfer and further advance products will see cuts of up to 0.22% on two and five-year fixed products.
Experts caution that the reductions do not necessarily mark the start of a sharp fall in mortgage rates. They note that fixed rates reflect expectations for future interest rates, meaning they can fall even when the Bank of England raises its base rate.
Brokers see targeted repricing
Manooch Suree, director of Uxbridge-based Zinga Financial Services, said he didn't think it was 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%."
Suree attributed the cuts to easing swap rates and a fight for remortgage business, with lenders wanting to keep existing customers and sharpening prices ahead of Thursday's Bank of England decision. He added: "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."
Rate rise expected this week
Toby Quanstrom, director of Eastbourne-based Quanstrom Financial, said a Bank of England rate rise was 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."
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said competition in the market was 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."
Justin Moy, managing director of Chelmsford-based EHF Mortgages, said the expected Bank of England base rate rise this week was 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."
