Halifax has handed customers some rare positive news, with a change kicking in from tomorrow. The lender has cut its mortgage rates by up to 0.1% as sub-5% deals hit the market again, and brokers told Newspage it was "positive news".
Halifax, which is owned by Lloyds, announced selected rate reductions that would be available from Friday, October 9. It is offering Lloyds Premier customers a 0.2% discount on its standard fixed rates. This means Lloyds Premier customers can access a two-year fix at 4.90%, a three-year fix at 4.87% and a 4.89% five-year fix.
Sub-5% deals return across the market
This week sub-5% deals have started to come in across the market again. Santander is offering a two-year fix at 4.92%, a three-year fix at 4.90% and a five-year fix at 4.93%. Yorkshire Building Society has a 4.83% two-year fix, 4.92% three-year fix and 4.95% five-year fix.
Aaron Strutt, product and communications director at London-based Trinity Financial, said there were now sub-5% fixes for borrowers to choose from. He added: "Halifax is the latest big bank to announce rate cuts and there are rumours that there will be more pricing improvements coming from other large banks over the next few days. Santander and Yorkshire Building Society are topping the best buy tables at the moment after bringing back more sub-5% fixes for borrowers to choose from."
"Just a few days ago it seemed like all of the sub-5% fixes would be pulled, but now there are at least six lenders offering them. This shows how quickly the mortgage market moves and why it is so important to monitor mortgage rates when you have a mortgage offer out so you can swap to cheaper rates if they suddenly appear."
Brokers react to the rate cuts
Gaurav Shukla, CEO at Marlow-based Home Me Mortgages, said it was positive news. He added: "We are seeing lenders starting to chip away at mortgage rates, with reductions across two, three and five-year fixes. Headline rates are looking better than last week, with some lenders now offering sub-5% deals across all three terms. For borrowers, this is positive news, but I would not get too hung up on finding the absolute lowest rate."
"A 0.05% or 0.1% difference can be less important than the overall product, fees, flexibility and the borrower’s plans. The interesting part is that lenders are clearly competing for business. Halifax’s discount for Lloyds Premier customers and Yorkshire Building Society’s latest reductions show lenders are still willing to sharpen their pricing."
"With rates changing almost daily, and further reductions potentially around the corner, borrowers should avoid waiting indefinitely for the perfect rate. If the mortgage works for you today, securing it does not necessarily mean you are stuck with it if rates improve before completion."
Mixed views on the scale of the cuts
Jamie Elvin, director of London-based Strive Mortgages, said a small cut wasn't worth celebrating. He added: "The return of sub-5% fixes is a welcome confidence boost, but borrowers won’t be throwing a party over a 0.1% cut. It’s progress, rather than a transformation in affordability."
"5% is a psychological barrier, so breaking below it could encourage buyers who have been sitting on their hands. But the mortgage payment matters far more than the headline. The danger is that borrowers become fixated on waiting for the next cut."
"Where lenders allow it, securing a deal and reviewing it before completion can offer breathing space without gambling everything on rates falling further. Product fees also matter: the lowest rate doesn’t always mean the cheapest mortgage."
Matt Coulson, founder of Rickmansworth-based Heron Financial, said the market was in a better place than two weeks ago. He added: "This is the other side of the coin from a fortnight ago. Then the story was that sub-5% deals were vanishing and the average was heading for 6%; now a handful of lenders are nudging them back under five. That whiplash is the whole point."
"Swap and funding-driven moves reverse about as fast as they arrive, which is exactly why I'd be wary of reading any single week as a trend, in either direction. I'd keep it in proportion, though. These are small cuts of around 0.1% from a few lenders, so it's competition and funding easing at the margin, well short of a race to the bottom. It's progress, and no more than that."
"The bigger test is still the Budget on the 28th, because the bond market's reaction will decide whether this easing holds or snaps back. For borrowers, this is exactly why keeping your rate under review right up to completion matters, because in a market this twitchy it can move down as easily as up."
