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Summary
- Halifax launched an ultra-low rate on loans on a two-year fixed deal at 0.83 per cent.
- The deal will be available through mortgage brokers from 9 August to borrowers wanting to loan up to 60 per cent of their house value.
- In July 2021, TSB Bank and HSBC Holdings announced two-year mortgages at a rate below one cent.
Amidst the intense price war between mortgage lenders, Halifax launched an ultra-low rate on loans on a two-year fixed deal at 0.83 per cent. The ultra-low rate will be available through its mortgage brokers from 9 August to those seeking to loan up to 60 per cent of their house value. The ultra-low mortgage rate rollout comes at a time of rate-cutting by some of the major lenders in the UK.
In July 2021, TSB Bank and HSBC Holdings Plc (LON: HSBA) announced two-year mortgage deals at a rate of 0.94 per cent, and the Nationwide Building Society (LON: NBS) became the first lender to provide a five-year rate at lower than 1 per cent.
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Halifax deal
The Halifax mortgage deal comes with a fee of £1,499 and is applicable for housing purchases in the range of £250,000 to £1 million. Halifax joins other lenders who are offering sub-1 per cent deals to borrowers with large deposits. Halifax’s new mortgage offer is expected to drive other lenders to join the sub-1 per cent rate bandwagon for borrowers with higher deposit value. However, only time will tell the actual terms of the mortgages offered by these companies and may often be associated with steep setup fees. Halifax is currently the only high street lender that charges for a basic valuation, implying that the most economical deal overall can be secured elsewhere for many borrowers.
Halifax’s new mortgage offer is being touted as the lowest rate by the broker community. It is indicative of the fact that lenders are keen on getting extremely low-interest rates to balance out a higher loan to value lending they were earlier forced to offer.
The price competition aims to attract borrowers, as the country’s house price boom is beginning to cool down. According to data by Halifax, in July – the first month since purchasers in England and Northern Ireland had to deal with high stamp duty holiday, prices surged by 0.4 per cent.
Housing prices have risen steeply in the last year, driven by Chancellor Rishi Sunak’s decision to scrap stamp duty on purchases up to £500,000 in Northern Ireland and England. However, the tax concession was only valid for houses up to £250,000 at the beginning of July and is expected to be revised to £125,000 in October this year. The holiday season has already ended in Wales and Scotland.
