Halifax joins rivals in cutting mortgage rates – BBC News BBC Homepage

Halifax is set to dramatically cut rates on some of its fixed-rate mortgage offerings, which could ease the pressure on some homeowners.

The UK’s biggest mortgage lender will cut rates by up to 0.71 percentage point from Friday, with a five-year fixed deal priced at 5.39% from 6.10%.

Other lenders such as HSBC, Nationwide and TSB have cut some rates.

Mortgage costs rose as the Bank of England hiked interest rates in a bid to stem soaring prices.

Halifax will cut prices on a range of products, with smaller reductions on fixed two-year deals and some aimed at first-time buyers.

Other major mortgage lenders cut rates this week, with some experts suggesting this could be a sign high inflation – which measures the rate of price increases – is easing.

In turn, this would suggest that the Bank of England’s interest rate may not stay so high for so long.

Although inflation has slowed to 7.9%, it remains nearly four times higher than the Bank of England’s 2% target.

The Bank of England raised interest rates for the 14th consecutive time last week from 5% to 5.25%. Higher interest rates mean people have to pay more on their mortgages, for example, which can mean they have less money to spend on other things.

Although lower mortgage rates are welcomed by homeowners, in practice they still face much higher repayments than in previous years.

There’s no sign of a return to the ultra-low sub-2% mortgage rates that many would have seen on their previous deal. Before rates started to rise in December 2021, there had been a decade of low household borrowing costs.

Among the rate cuts, HSBC slashed some proposed homeownership, first-time home buyer and remortgage rates by up to 0.35 percentage points, as well as adding an incentive to £500 refund on select offers.

Nationwide is also slashing the rates offered to people remortgaging by up to 0.35 percentage points on two-, three- and five-year fixed contracts.

Aaron Strutt, of mortgage broker Trinity Financial, said: ‘More major banks and building societies are cutting rates, which is good news, especially given the scale of the rate increases we’re seeing. we have seen in recent months.

“It wouldn’t be a surprise if more of them improve their rates over the next few weeks,” he added.

“Lenders are starting to realize that the market is slowing down and they need to improve pricing to attract more borrowers.”

It was the first time the Bank had acknowledged that interest rates would stay high for longer.

Chancellor Jeremy Hunt also said rising interest rates would be “a concern for families with mortgages and businesses with loans”, but reiterated the government’s aim to bring inflation down.

On Thursday, new research from the Royal Institution of Chartered Surveyors (RICS) suggested that rising mortgage rates were weighing heavily on consumers.

Its survey found house prices in the UK had seen the most widespread declines since 2009 in July.

Meanwhile, new data shows that the number of homeowners with mortgage arrears rose in the three months to June.

UK Finance, which represents the banking industry, said 81,900 homeowners’ mortgages were overdue during the period, up 7% from January to March and 9% from the same period the last year.

Homebuilder Persimmon reported a sharp drop in sales in the first six months of the year as it sold far fewer homes.

The company said it completed 4,249 new constructions during the period, compared to 6,652 in the same period last year.

Persimmon managing director Dean Finch said he had “solid” sales and realized savings despite “higher mortgage rates, the removal of purchase assistance and significant uncertainty in the market “.

Higher interest rates also have an impact on people who rent a home.

With landlords’ incomes reduced, RICS warned that rents are likely to continue to rise as they seek to pass on any increases to their tenants. Alternatively, owners could choose to sell, leaving fewer properties for rent.