Halifax launches "bold" home loan change

The battle for Britain’s mortgage borrowers has dramatically intensified as Halifax, the UK’s biggest mortgage lender, slashed rates and launched a market-leading two-year fixed deal at just 3.79%.

The eye-catching product – available from today – is aimed at new customers borrowing £250,000 or more, with up to 60% loan-to-value, and comes with a hefty £1,999 fee.

It is part of a raft of new sub-4% offerings that could spark a fresh wave of rate-cutting by rival banks.

Other new Halifax deals include a two-year fix at 3.90% with a £999 fee, and a five-year fix at 3.98% – again with a £999 fee. However, the cheaper options are currently reserved for new borrowers, with existing Halifax customers often facing steeper rates depending on their current equity levels.

Industry experts say the move could help jolt the housing market back to life after a slowdown in mortgage approvals.

Stephen Perkins, Managing Director at Yellow Brick Mortgages, hailed the announcement as a bold move. “This is a bold statement of intent from the UK's largest mortgage lender.

"This 3.79% headline rate is market-leading and hopefully will instigate another round of rate cuts from those high street lenders not wanting to be left behind.”

His views were echoed by Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, who told Newspage: “The three-month dip in mortgage approvals for house purchase, which the Bank of England confirmed today, may soon be reversed if mortgage rates continue to edge down as they are. It's getting increasingly competitive by the day on the mortgage front, which will be music to the ears of borrowers.”

Tony Castle, Managing Director at PFG Mortgages, declared: “The rate war is seriously heating up in the mortgage market, with the Halifax the latest to lender to enter the fray. Following recent moves by several major lenders to reduce their rates, Halifax has now cut its own to market-leading levels.

"This aggressive pricing shift signals intensifying competition among high street banks, with borrowers set to benefit as lenders fight for attention in a cooling market.”

While the rates are attractive, brokers urge borrowers to look beyond the headline figures. Justin Moy, Managing Director at EHF Mortgages, noted: “Mortgage rates have hit a new low with these products from the Halifax, but the larger fee of £1999 needs to be carefully considered before committing to the headline-grabbing rate.

"Rates are creeping down slowly but surely, and many High Street lenders are now offering sub-4% deals for those with the largest deposits or equity. However, you don't have to commit to 5-year terms, with many 2-year deals now cheaper than equivalent 5-year options.”

Others suggest Halifax’s move may pressure rivals to follow suit. Hannah Bashford, Director at Model Financial Solutions, said: “The rate war is officially raging. It's great to see the UK’s biggest lender putting out some market-leading rates and helping not only those looking to purchase but people needing to remortgage, too.”

Jack Tutton, Director at SJ Mortgages, added: “The mortgage market is really hotting up and Halifax have stolen the march with their latest cuts.

"Their headline rate of 3.79% will be a game changer and will make other lenders consider their pricing. The rate that lenders are cutting interest rates over the past week will be gratefully welcomed by mortgage holders and will boost the property market. The hope will be that the cuts we have seen aren't just a mini heat wave but will set in for the whole summer.”

Aaron Strutt, Product and Communications Director at Trinity Financial, said lenders are scrambling to stay competitive. “Lenders are constantly sending out rate change announcements at the moment, telling us they are lowering their rates. The cost of funding mortgages is still decreasing, which means lenders can offer more competitive rates. There is a selection of lenders fighting it out to the top of the best buy tables, including HSBC, Halifax, Barclays and NatWest.”