THE Halifax is cutting mortgage rates by up to 0.15% from tomorrow with other lenders expected to follow in a “very encouraging” sign for borrowers.
The lender is making the changes to its mortgage product range from Friday 14 August.
Its homemover and first-time buyer products are being reduced by up to 0.15% while its remortgage products are being reduced by up to 0.13% on selected fixed rate products.
Its product transfer and further advance products are seeing rate reductions of up to 0.12%.
This comes as Halifax raised rates by up to 0.12% only last week.
The move will offer some relief to borrowers after a volatile period for mortgage pricing, with lenders repeatedly repricing deals in previous weeks.
Although the reductions are relatively modest, brokers say the significance lies in one of Britain’s biggest mortgage lenders deciding it has room to cut.
Halifax’s decision could also increase competitive pressure across the market, potentially prompting rival banks and building societies to respond with reductions of their own, brokers say.
For first-time buyers and homemovers struggling with affordability, as well as homeowners approaching the end of existing fixed deals, brokers say even small improvements in pricing can make a difference to monthly repayments and confidence.
Significance
Jamie Elvin, Director at London-based Strive Mortgages, said Halifax has “fired the first shot” in the mortgage price war.
He added: “A 0.15% cut might not look dramatic on paper, but when a lender the size of Halifax moves, the rest of the market takes notice. After months of rates moving up, down and sideways, this is a welcome signal that lenders are prepared to compete harder for borrowers.
“The real question is what happens next. If competitors respond and start sharpening their own pricing, this modest reduction could prove far more significant than the headline number suggests. We’re not in a mortgage price war yet, but Halifax may just have fired the first shot.”
Jamie Alexander, Mortgage Director at Romsey-based Alexander Southwell Mortgages, said he expects more lenders to now cut.
He added: “Nobody is going to celebrate 0.15%, but that is not really the point. Halifax is one of the biggest lenders in the country and when they move, others tend to follow. That is where the real significance lies. For borrowers who have been sitting on the fence waiting for rates to feel more comfortable, cuts like this are a nudge in the right direction.
“It will not transform affordability overnight but it keeps the momentum going and puts pressure on competitors to sharpen their own pricing. The direction of travel is right. That matters more than the size of any single cut.”
Louis Mason, Content and Communications Director at London-based Oportfolio Mortgages, welcomed the cuts.
He added: “Mortgage rates have spent much of this year doing a frustrating two-step. One step forward, one step back. So Halifax moving in the right direction is certainly welcome. The reductions themselves aren’t mid-blowing, but that’s almost beside the point.
“Halifax is one of the biggest players in the mortgage market and when a lender of that size moves, competitors will be watching closely. If others respond, a 0.15% cut could end up being more significant than it first appears.
“For borrowers, particularly those sitting on the fence waiting for that ‘magic rate’, it’s another reminder that lenders are still competing hard for good business. Borrowers should focus on securing a deal that works for them rather than trying to perfectly time the market.”
Trend
Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers, said the cuts are small but encouraging.
He added: “A tiny step in the right direction. Whilst nobody is punching the air about 0.15%, it does show a growing trend of reductions amongst lenders and this is very encouraging.”
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, said borrowers need to act quickly.
He added: “This is a classic volume-driven play. Halifax had fallen behind more aggressive market rivals, so these modest cuts aim to pull them straight back into the conversation for summer movers.
“While not a dramatic price crash, it gives brokers fresh leverage to secure sharper terms before autumn. Acting quickly remains essential if competitor lenders decide to react.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said the market may be finally getting some momentum back.
He added: “Some positive news for borrowers: not the largest cut, but an indication that some momentum is returning to the mortgage market. First-time buyers and homemovers will be encouraged to buy; those falling off cheap deals from 2021 will benefit the most. More headroom for other lenders to follow suit.”
Confidence
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, said it is a “positive signal”.
She added: “A 0.15% cut might not look dramatic on paper, but this is exactly the kind of movement the mortgage market needs right now. Borrowers have spent months watching rates move up, down and sideways, so cuts from a major lender like Halifax help rebuild confidence.
“They also put pressure on competitors to sharpen their own pricing, which is where things can start getting interesting. For first-time buyers especially, every reduction matters because affordability remains incredibly tight. The same applies to existing borrowers coming off old fixed rates who are still facing a payment shock.
“I wouldn’t call this the start of a mortgage rate war yet, but I would absolutely call it a positive signal. If more lenders follow, August could become a much better month for borrowers than many expected.”
