Halifax has made a bold move by lowering its mortgage rates, now offering the most competitive two-year fixed deal on the market.
The lender has dropped its lowest rate for remortgaging from 4.1% to 3.79%, making it a standout best-buy option for eligible borrowers.
A number of other banks and building societies are also offering sub-4% deals, particularly to customers who are either remortgaging or purchasing with a sizeable deposit or equity.
Halifax’s attractive 3.79% rate is available for loans of £250,000 or more, and only to borrowers with at least a 40% deposit. This means applicants will need to own a property worth £417,000 or more to qualify.
However, the deal comes with a significant arrangement fee of £1,999, which borrowers should factor into the overall cost when comparing mortgage options.
It’s important to carefully compare both the interest rate and any associated fees. In some cases, a slightly higher rate with a lower fee could actually work out cheaper in the long run. Tools like This is Money’s true cost mortgage calculator can help with this.
This deal is also limited to new Halifax customers, as the lender offers slightly higher rates to those already with them.
In comparison, NatWest is currently offering a similar two-year fix at 3.88%, but with a lower arrangement fee of £1,495.
HSBC also offers a 3.88% rate, but only to customers with a Premier account, making it less widely accessible.
Jack Tutton, director at Hampshire-based broker SJ Mortgages, commented that the mortgage market is becoming increasingly competitive. He noted that Halifax’s new rate is likely to shake up the sector and push other lenders to review their pricing strategies.
Halifax is offering a five-year fixed mortgage rate of 3.88%, available to those remortgaging with at least a 40% deposit and borrowing £250,000 or more. This deal also comes with a fee of £1,999.
One of the largest reductions from Halifax was on its fee-free two-year fixed remortgage deal for customers with a 40% deposit. The rate on this product dropped significantly from 4.85% to 4.51%.
Lenders have been lowering mortgage rates for a number of reasons. One key factor is the expectation that the Bank of England will reduce its base rate in the near future.
There is also strong competition among lenders who are eager to attract new customers, particularly as there are concerns the recent rise in stamp duty from 1 April could cool down the property market.
Recent figures released by the Bank of England show a continued decline in mortgage approvals. In March, approvals for home purchases dropped by 1.2%, marking the third consecutive monthly fall.
Since mortgage approvals typically occur weeks or even months before a sale is completed, those approved in March would have been too late to benefit from the reduced stamp duty rates.
Nick Maud, director of research at Savills, observed that buyer activity had peaked in October and December 2024. He believes this was largely due to first-time buyers trying to complete purchases before the end of the stamp duty relief.
Looking ahead, Mr Maud suggests that any further cuts to the base rate, along with proposed changes to lending regulations by the Financial Conduct Authority, could help support renewed interest and demand in the housing market.
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