Cost of Living Crisis: Halifax Joins Rivals in Cutting Mortgage Rates

Summary:

• Halifax, the UK's biggest mortgage lender, is reducing rates by up to 0.71 percentage points.
• HSBC and other major banks have also announced rate cuts in response to rising mortgage rates.
• The reduction in rates provides relief to homeowners and potential buyers, especially for fixed-rate deals.
• The move is influenced by expectations of Bank of England rates and inflation trends.
• Mortgage rates have been on the rise due to consecutive interest rate increases by the Bank of England.
• Recent decrease in inflation offers optimism about possible rate stabilization.
• Mortgage companies are aiming to attract customers by lowering rates amidst a slower housing market.
• Government hopes for economic relief as households face the end of fixed-rate mortgage deals.

The UK's biggest mortgage lender Halifax is set to cut rates in a move that sees it follow other major banks in starting to reduce the pressure on homeowners. From tomorrow, Halifax will reduce rates by up to 0.71 percentage points. That means a five-year fixed deal will stand at 5.39% down from 6.1% at its peak, not in the latest move. The move follows HSBC announcing it will cut rates by as much as 0.2% nationwide, which is the UK's second biggest mortgage lender, reduced prices on some fixed products by up to 0.55% yesterday as well.

Well, our political correspondent, Amanda Acas, joins us live now. Amanda, this is an important continuation of an existing theme, given that Halifax is the biggest lender that has been going on now for the last couple of weeks, clearly after the Bank of England meeting last week, but also just before that, and it all centers on what expectations are for the Bank of England's rate going forward from here over the next couple of years. Yes, indeed, and the broader picture around inflation as well. This really will come as some relief to people who are having to remortgage because they've come to an end of a fixed-rate deal or first-time buyers trying to get on the ladder. The headline reduction is this 0.71 mortgage point fall for five-year fixed-rate deals, but there are also cuts for shorter-term deals, two-year fixed-term rates down by 0.27% as well. And it follows, as you say, similar decisions by other big names, HSBC, Lloyd's TSB nationwide, as well as smaller building societies as well. Now, mortgage rates, of course, have been rising rapidly over the past few months, a 15-year high, and that follows these 14 months of consecutive interest rate raises by the Bank of England. Now, 5.25% from last week, the Governor of the Bank of England warning they're likely to stay high for some time until he can see real evidence that prices are beginning to come down. Having said that, the latest rate of inflation has fallen to 7.9%, giving real optimism to some that perhaps the trajectory is changing. And I think what we're seeing here, according to experts, really is evidence that the mortgage companies are feeling fairly optimistic that inflation is beginning to come in line, and also a market realization that, frankly, things have slowed down so much because people haven't been able to afford mortgages. They're having to cut the rates to try and attract some more customers back, as surveyed by the Royal College of Chartered Surveyors out today suggests that the number of inquiries by buyers is down by 45%. The price that house prices have seen the most widespread falls since 2009, so clearly the market really has been suffering. Mortgage companies are hoping that this will help provide a bit of impetus. Rates still are, though, pretty high, fundamentally. It's a big shock if you're coming to the end of a fixed-rate mortgage. And for the government, that is a real worry because more and more households over the next year or so are going to be coming to the end of those deals, facing that hike as they negotiate a new deal with their mortgage providers. There's an election coming up next year, and the government really is resting their hopes on inflation coming down and interest rates being able to come down too.