Mortgage relief as Halifax, First Direct and HSBC among lenders cutting rates

14 November 2023 , 14:52

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Major lenders are cutting their mortgage rates (Image: Bloomberg via Getty Images)

Many Brits can breathe a sigh of relief as major UK lenders are announcing new mortgage rate cuts - widening the choice for borrowers searching for deals under the 5% mark.

First Direct announced rate cuts of up to 0.40 percentage points from Tuesday and Halifax also announced cuts to its by up to 0.46 percentage points from Wednesday. This includes cutting a five-year fix for borrowers with a 10% deposit by 0.24 percentage points to reach 4.97%.

The lending giant will also be reducing a five-year fix for borrowers with a 40% deposit by 0.20 percentage points, to 4.53%. Both Halifax deals have a £999 fee. HSBC is also expected to make widespread reductions to its mortgage rates tomorrow however the details have not yet been announced.

First Direct said it is the most substantial round of mortgage rate drops it has made since February this year. It has also launched two new mortgages for borrowers with a 5% deposit. The challenger bank - which is owned by HSBC - is now offering a rate as low as 4.74%, for new and existing customers looking for a five-year fixed-rate deal, with a 40% deposit.

Liam O'Hara, head of mortgages at First Direct, said: "After today's rate reductions, several of our mortgage products are now priced under 5%. Our switcher rates have also been significantly reduced to ensure existing customers have competitive options when looking to re-mortgage. We're also committed to increasing product availability for those looking to get on the ladder with a smaller deposit, which is why we're also launching new products in the 95% LTV (loan-to-value) space today."

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The Bank of England base recently stopped hiking its base interest rate after 14 rises in a row. For the last two months, the base rate has been held at 5.22%.

According to figures from financial information website Moneyfacts, across all deposit sizes, the average two-year fixed homeowner mortgage rate on the market on Tuesday morning was 6.21%. This was down from an average rate of 6.22% on Monday. The average five-year fixed homeowner mortgage rate was 5.80% on Tuesday morning, down from an average rate of 5.81% on Monday.

James Hyde, a spokesperson at moneyfactscompare.co.uk, said Nationwide Building Society and Virgin Money have also been among the lenders making mortgage rate cuts. These rate cuts from First Direct are emblematic of the recent drops in mortgage rates offered by a number of prominent lenders. There have been five-year fixed products available at sub-5% for a while now, though lowest rates now sit comfortably below that threshold."

Lewis Shaw, director at Mansfield-based independent mortgage broker, Shaw Financial Services, told website Newspage: "Halifax stepping into the fray once again and dropping rates close to the 4.5% mark will certainly put the cat amongst the pigeons. Hopefully, this adds some momentum to the market and will trigger other lenders to sharpen their pencils or risk losing out."

Simon Gammon, managing partner at Knight Frank Finance, said: "It's now looking increasingly positive that peak mortgage rates are behind us and we are moving into a period in which mortgage rates are higher than people are used to, but are ultimately more manageable."

* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]

S P Jones