Halifax customers get new good news update ‘but it might be short-lived’ | Personal Finance | Finance

Halifax has issued a fresh update for both existing customers and those considering taking out a mortgage, though experts are warning that the positive news may be short-lived.

The lender announced mortgage rate reductions of up to 0.25% on Tuesday, however brokers have cautioned that the cuts could prove “short-lived” as SONIA swap rates, which are used to price fixed-rate mortgages, have climbed sharply amid renewed tensions in the Middle East. Halifax confirmed on Tuesday afternoon that it was cutting rates by up to 0.25% on two, three and five-year fixed rate remortgage products, and by up to 0.24% on two and five-year fixed rate product transfer and further advance mortgages.

The bank also revealed reductions of up to 0.05% on two, three and five-year Homemover and First Time Buyer fixed rates. Despite the welcome news, the two-year SONIA swap rose 13.2bps on Tuesday to 4.338%, while the five-year climbed 13.6bps to 4.313%.

In recent weeks, a number of lenders have unveiled significant rate reductions, yet Emma Jones, MD at Runcorn-based Whenthebanksaysno.co.uk, warned that such a sharp rise in swap rates could prompt lenders to reprice upwards in the coming days.

She said: “Renewed tensions in the Middle East are sending swaps north again and mortgage rates could soon follow. If they carry on climbing, the rates that are here today could be gone tomorrow.”

Nouran Moustafa, practice principal and IFA at Roxton Wealth, described the rise in swap rates as “a real warning light for borrowers” and warned that “if Middle East tensions keep pushing oil, inflation expectations and swap rates higher, some of today’s cuts could disappear very quickly”.

She continued: “For borrowers, the message is simple: do not wait for a perfect rate that may never arrive. If your deal is ending in the next six months, review your options now, secure something and keep monitoring. A good adviser can switch you if a better rate appears before completion.”

Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, echoed those concerns: “With renewed instability in the Gulf, recent rate cuts may be short-lived.”

Rohit Kohli, director at Romsey-based The Mortgage Stop, likened the current mortgage market to a rollercoaster, cautioning that some lenders are withdrawing rates with little to no notice.

He warned on Tuesday: “Swap rates have moved up sharply today, and when funding costs rise, lenders that price heavily off swaps often respond quickly. We have already seen other lenders pull products at short notice today, including one with less than two hours’ warning.

“My advice to borrowers is simple: if the rate works for you today, do not delay. Get your documents ready, speak to a broker and secure the deal while it is available. You can always review later if pricing improves, but you cannot lock in a rate after it has been withdrawn.”

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, urged people to “think carefully before playing the waiting game”.

He warned: “Any escalation could send rates back up as quickly as they came down. For any existing Halifax borrowers, a swift internal product transfer may well be worth more than sitting tight for a remortgage deal that could yet prove elusive. These can potentially be revised should rates drop.”

Echoing Moustafa’s sentiments, Ken James, director at London-based Contractor Mortgage Services, described the cuts as “good news on the surface, but the market underneath is flashing warning lights, because while Halifax is cutting, the cost of funding mortgages is rising fast”.

He went on to say: “If swaps stay elevated, these rates won’t stick around but for those who can benefit from these cuts, the message is clear: ACT and don’t dilly-dally.”