Halifax has reduced a range of mortgage rates by up to 0.25%, offering some relief to borrowers facing high repayment costs. The changes affect remortgage, product transfer and selected fixed-rate deals for homemovers and first-time buyers. Yet mortgage advisers and brokers are warning that the reductions could prove temporary, as rising SONIA swap rates and renewed instability in the Middle East place fresh pressure on lenders’ funding costs.
Halifax confirmed on Tuesday that it would lower rates on two, three and five-year fixed-rate remortgage products by as much as 0.25%. The lender also announced reductions of up to 0.24% on selected product transfer and further advance mortgages.
Smaller reductions of up to 0.05% were also introduced on selected homemover and first-time buyer fixed-rate products. According to reports, the lender also extended completion dates across several mortgage categories, including remortgages and further advances.
Rising Swap Rates Raise Concerns Over Future Pricing
Despite the latest cuts, brokers have pointed to a sharp rise in SONIA swap rates, which lenders use to price fixed-rate mortgages. The two-year SONIA swap increased by 13.2 basis points to 4.338% on Tuesday, while the five-year swap rose 13.6 basis points to 4.313%.
Several advisers said the movement reflected renewed tensions in the Middle East, which they warned could influence inflation expectations and borrowing costs. According to reports, some lenders had already begun withdrawing products at short notice.
Emma Jones, managing director at Whenthebanksaysno.co.uk, said rising swap rates could quickly reverse recent improvements for borrowers. “If they carry on climbing, the rates that are here today could be gone tomorrow,” she said.
Nouran Moustafa, practice principal and independent financial adviser at Roxton Wealth, described the increase in swap rates as “a real warning light for borrowers”. She said borrowers approaching the end of their current mortgage deal should review options early and continue monitoring the market after securing a rate.
Rohit Kohli, director at The Mortgage Stop, said some lenders had already removed products with very little notice. He stated that one lender had withdrawn rates with less than two hours’ warning as funding costs increased during the day.
Brokers Urge Borrowers to Act Quickly on Available Deals
Mortgage advisers broadly agreed that borrowers may need to move faster if they wish to secure current pricing. Riz Malik, independent financial adviser at R3 Wealth, said recent rate reductions could be “short-lived” if instability in the Gulf continued.
David Stirling, an adviser at Mint Wealth in Belfast, warned borrowers against “playing the waiting game”. He suggested that existing Halifax customers could benefit from internal product transfers rather than delaying in anticipation of further reductions elsewhere in the market.
Ken James, director at Contractor Mortgage Services in London, said that while Halifax’s announcement appeared positive, underlying funding pressures remained a concern. He said rising swap rates could eventually force lenders to increase prices again.
According to Mortgage Solutions, BM Solutions also announced rate reductions of up to 0.25% across selected product transfer and further advance deals. The lender confirmed that revised rates would take effect from Wednesday.
At the same time, specialist lender Foundation announced it would withdraw all residential products from 5.30pm on Wednesday before replacing them the following day. Trinity Financial’s product and communications director Aaron Strutt said lenders were likely to pause further reductions as mortgage funding costs continued to rise.
