The recent mortgage price war between High Street lenders took another turn today with the introduction of Halifax’s lowest ever two-year fixed rate.
The lender, the biggest in the UK mortgage market, have cut rates across their range by up to a third, and have introduced a new 0.83% rate, fixed for two years, shifting focus back to HSBC and Nationwide, who have each produced headline grabbing sub-1% rates recently.
Following the cooling of a red-hot property market during June, the market remains buoyant and the main players of the mortgage industry are using this time to further tighten their grip on the industry with these historically low rates. Halifax have also looked to the future in adding a new 10-year fixed rate to their line-up.
“With house prices booming and interest rates falling, there have been understandable concerns from clients about what this would mean to the market in terms of rates in the medium term” says Andy McBride, director of Professional Contractor Mortgages. “While many other banks have also priced their rates at attractive levels, Halifax have taken a step further and catered for those looking at longer term value with the addition of a ten-year fix.”
Longer term fixed rates have been scarce in their availability of late, thanks largely to a volatile housing market over the past five years, from Brexit through to the pandemic and now the economic recovery of both.
Concerns raised by some risk averse borrowers have been listened to by Halifax when coming up with pricing on their new rates, notably a 2.07% rate, fixed for ten years, available from today.
“Ten-year fixed rates have very rarely offered particularly good value in the past” says McBride. “Nationwide offered a ten-year rate up to about 2015 which was significantly more expensive than the five-year rates of the time. To think back then that an offer of a ten-year fix at a little over 2% would be on the table in 2021 would be absolute lunacy.”
“With house prices continuing to rise, and interest rates falling further still, the point at which the scales begin to tip and value seeps from the mortgage market could be approaching sooner rather than later, with the Bank of England voting to keep Base Rate at 0.1% last week amid some considerable opposition.”
In announcing their Base Rate decision last week, the Bank of England’s Monetary Policy Committee reported that they expect inflation to rise to 4% in the final quarter of 2021, adding further pressure onto mortgage interest rates.
There is a word of caution from McBride towards those who still enjoy historic base rate trackers, who may have been thinking about remortgaging for some time, that the sliding doors moment could be fast approaching.
“The mortgage industry is very finely balanced at present amid rising inflation and falling interest rates. Waiting too long could cause the balance to shift firmly out of your favor and end up costing thousands. Seek advice today around your options before it’s too late.”