The UK mortgage market is currently experiencing significant changes, with major lenders like Halifax, HSBC, and First Direct making notable adjustments to their rates.
In the last two months, we’ve seen a substantial drop in the cheapest five-year fixed mortgage rates – from just over 5% to nearly 4.5%. This trend is a result of lenders anticipating that interest rates have peaked, with expectations of a decline starting from next year.
Specifics of the Rate Cuts
- Halifax: Starting tomorrow, Halifax will implement rate cuts up to 0.46 percentage points for home buyers. Notably, they’re introducing a competitive five-year fixed rate of 4.53% for those with at least a 40% deposit (60% loan-to-value), accompanied by a £999 product fee. To illustrate, on a £200,000 mortgage over 25 years, this equates to monthly payments of £1,115.
- First Direct: Effective today, First Direct has also reduced rates across all its repayment and offset mortgages. The most notable cuts are for existing customers looking to switch, with two-year fixed rates starting at 5.09% and the lowest three-year fixed rate at 4.99%.
Comparing with the Market
- For a 25% deposit (75% loan-to-value), Halifax’s five-year fixed rate of 4.63% currently outperforms the next best market rate offered by Santander at 4.9%.
- Halifax also leads in two-year fixes for similar deposit ranges, beating Nationwide’s next best deal of 5.51% with their rate of 5.07%.
The Anticipation Around HSBC’s Rate Cuts
HSBC has announced imminent rate cuts, details of which will be revealed tomorrow. Industry experts anticipate these cuts to further stimulate competition in the mortgage market, particularly benefiting those with higher loan-to-values.
What This Means for Property Investors
These developments suggest a more favorable borrowing environment for property investors, especially those looking to secure mortgages with higher deposits. The competitive rates offered by these lenders can lead to significant savings over the term of a mortgage.
Expert Insights
- Nicholas Mendes (John Charcol): Predicts a continued downward trend in mortgage rates, possibly leading to sub-4% deals by the second half of next year.
- Stephen Perkins (Yellow Brick Mortgages): Expects HSBC’s rate reductions to trigger more competitive rates across the market, influenced by upcoming inflation news.
- Craig Fish (Lodestone Mortgages and Protection): Highlights the potential of these rate cuts to benefit remortgage customers and those with higher loan-to-values.