There was good news for customers announced on Tuesday afternoon
Halifax has given a new update to customers and potential customers, but there’s a warning that the good news might not last.
It announced mortgage rate reductions of up to 0.25% on Tuesday, but brokers have said the cuts could be “short-lived” as SONIA swap rates, which are used to price fixed-rate mortgages, have risen sharply following renewed tensions in the Middle East. Halifax on Tuesday afternoon said it was making reductions of up to 0.25% on two, three and five-year fixed rate remortgage products and up to 0.24% on two and five-year fixed rate product transfer and further advance mortgages.
It also announced reductions of up to 0.05% on two, three and five-year Homemover and First Time Buyer fixed rates. However, the two-year SONIA swap was up 13.2bps on Tuesday, at 4.338%, while the five-year was up 13.6bps, at 4.313%.
In recent weeks, numerous lenders have announced chunky rate reductions, but Emma Jones, MD at Runcorn-based Whenthebanksaysno.co.uk, cautioned that this kind of jump in swap rates could see lenders reprice upwards in the days ahead.
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 increase in swap rates as “a real warning light for borrowers” and said “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, agreed: “With renewed instability in the Gulf, recent rate cuts may be short-lived.”
Rohit Kohli, director at Romsey-based The Mortgage Stop, described the current mortgage market as a rollercoaster and said some lenders are pulling rates with hardly any 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 added: “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.”
Mirroring Moustafa, Ken James, director at London-based Contractor Mortgage Services, said the cuts were “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 continued: “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.”
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