BROKERS have welcomed rate cuts from the Halifax but said “borrowers should not assume rates will continue on a downward trajectory” following US strikes on Iranian military sites over the weekend, which saw oil prices once again edge higher Monday morning.
Late Friday afternoon, the Halifax announced it was reducing its First-Time Buyer and Homemover fixed rates by up to 0.12% and remortgage fixed rates by up to 0.14%.
Gen H also announced another set of rate reductions across its product range on Monday.
Its 5-year and 2-year 60%–80% loan-to-value (LTV) rates will come down by 0.2% and 0.15% respectively from this evening. The lender’s New Build Boost rate will also come down by 0.1%.
The cuts come as Nationwide data shows house prices fell by 0.6% last month, as the impact of the Middle East crisis on consumer sentiment and mortgage rates really started to bite.
Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, welcomed the cuts but urged borrowers not to get complacent.
He said: “When a lender like the Halifax cuts rates, other lenders take note. As we enter a new month, the hope is that rates continue to edge down but escalating tensions between the US and Iran over the weekend are already sending the oil price higher, which has the potential to apply upward pressure on swap rates that determine fixed rate mortgage pricing.
“Gen H announcing cuts on Monday is another positive but borrowers should not assume rates will continue on a downward trajectory as markets remain volatile.”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, echoed that sentiment: “Halifax announcing cuts on Friday and Gen H this morning gets June off to a good start but in the current turbulent economic environment lenders can price in the other direction very quickly.”
Omer Mehmet, Managing Director at Welling-based Trinity Finance, also said any reductions can be quickly reversed: “These cuts are a step in the right direction but nothing can be taken for granted with markets so on edge and rate reductions can quickly be reversed. The lower rates that some borrowers are holding out for are by no means guaranteed.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said: “It’s good to see further cuts from one of the major High Street lenders, as Swap rates improve a little and confidence returns with mortgage providers.
“However, the ‘little and often’ approach creates havoc for both brokers and borrowers, so hopefully we will not see any changes smaller than 0.1% from Halifax or other high street lenders.”
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said borrowers shouldn’t “mistake momentum for a trend”.
He continued: “Swap rates are still volatile, and what’s available on Monday may not be there by Friday. If you’re sitting on the fence waiting for rates to fall further, you could easily miss the window. If the numbers stack up for you today, then you should act. Lock it in, and then keep one eye on the market.”
Charles Hart, Business Principal at Milton Keynes-based LionHart Mortgages & Protection, said speed is of the essence for borrowers in current market conditions: “We have repeatedly seen how fragile and short-lived these wins can be, so acting quickly to secure fresh reduced rates will be key.”
Nouran Moustafa, Practice Principal and IFA at Roxton Wealth, believes the impact of the rate cuts will be limited given the backdrop of weak sentiment and rising costs: “Halifax cutting rates is good news, but let’s not pretend a 0.12% reduction suddenly fixes affordability. Borrowers are not sitting there thinking, “fantastic, my life has changed”.
“They are still dealing with higher monthly payments, tighter criteria, childcare costs, food prices and nervous household budgets.
“I do not think we are heading into some magical rate free fall. This feels more like careful competition than a market revolution.
“The borrowers who benefit most will be the ones who review early, understand their options and do not just chase the lowest headline rate. A small rate cut helps, but strategy matters more than excitement.”
Photo by Miles Burke on Unsplash
