Halifax cuts mortgage rates with other lenders expected to follow suit

One of Britain’s biggest lenders kicked off 2024 with a wave of mortgage rate cuts.

Halifax has reduced its remortgage rates on its two-, five- and 10-year fixed-rate deals by up to 0.83 percentage points.

It also reduced rates for its existing customers who choose to remain loyal and refinance with the bank by up to 0.92 percentage points.

Its cheapest two-year solution for those remortgaging with at least 40 per cent of their home equity is now 4.68 per cent with a fee of £999.

That compares with a market average of 5.93 percent for two-year corrections, according to Moneyfacts.

Halifax’s cheapest rate is currently a five-year fix of 4.28 per cent aimed at homebuyers purchasing with at least a 40 per cent deposit.

It is currently the second-best offer on the market, after Generation Home’s 3.94 per cent offer, which was launched just before Christmas.

David Hollingworth, associate director at L&C Mortgages, believes this will be the first of many rate cuts to come in 2024.

Mortgage rates have been falling for the past three months and many lenders have lowered the price of their mortgages based on future market expectations for interest rates.

Market interest rate expectations are reflected in swap rates. These swap rates are influenced by long-term market projections for the Bank of England’s base rate, as well as the broader economy, banks’ internal objectives and competitors’ pricing.

Lenders use Sonia swaps to price mortgages. Five-year swaps currently stand at 3.4 percent. Two-year swaps are now at 4.02 percent.

In July alone, five-year swaps were above 5 percent. Similarly, two-year swaps were around 6 percent.

Hollingworth says: “As the largest lender, Halifax’s moves are always worth watching and should set the tone for the New Year.”

‘I think Halifax’s move will probably be the first of many, as swap rates have fallen again over the holidays and markets seem convinced that interest rates will be cut.

‘This should translate into further cuts to fixed rates and is likely to be a quick start, as demonstrated by the move in Halifax.

We saw five-year rates drop below 4 per cent just before Christmas and, with the level of competition in the market, I expect lenders will be quick to raise their rates.

“With intense competition and a desire to increase volume, the market is likely to be very aggressive, but a price war should be good news for those borrowers reaching the end of their current agreement next year.”