New mortgage best buys as Halifax, HSBC and First Direct cut rates

Mortgage lenders continue to cut rates faster than expected, with Halifax, HSBC and First Direct the latest banks to announce rate cuts.

In two months, the cheapest five-year fixed rates have fallen from just over 5 percent to almost 4.5 percent.

With lenders now predicting that interest rates have peaked and many expecting rates to start falling from next year, mortgage rates are falling.

> Read the experts’ predictions about when the base rate will change

Nicholas Mendes, mortgage technical manager at John Charcol, said: ‘We will continue to see mortgage rates on a downward trend unless something unusual happens in the market.

‘Every week we continue to see price revisions from lenders, but this depends hugely on market confidence and sentiment for the future.

‘We expect less than 4 percent of deals to come in from the second half of next year.

‘Rates are falling faster than expected six months ago. If we continue on the same path, we may see this window appear sooner.”

> Use This is Money’s mortgage finder to see how much you can borrow

What are the latest interest rate cuts?

Starting tomorrow, Halifax will cut homebuyer rates by up to 0.46 percentage points.

The changes include a new five-year best-buy fix for those who buy with a deposit of at least 40 percent (60 percent loan-to-value).

The 4.53 per cent deal comes with a product fee of £999. Someone who insures this rate on a £200,000 mortgage paid off over 25 years will end up paying £1,115 per month.

According to Moneyfacts, the average five-year fixed rate mortgage for those with the largest deposits currently costs 5.39 percent.

Halifax has also launched a host of new best buys for those with smaller deposits.

For example, those with a 25 per cent down payment (75 per cent loan-to-value) can secure a 4.63 per cent interest rate with a five-year fix in Halifax.

To put that into context, the second best rate on the market is offered by Santander, which charges 4.9 percent.

Those who buy with a 10 percent down payment can even get an interest rate of less than 5 percent in Halifax if they commit to a five-year fixed interest rate period.

In many cases, the two-year solutions are also at the forefront of the market. For example, a homebuyer with a 25 per cent down payment could get an interest rate of 5.07 per cent in Halifax. This is better than the next best deal offered by Nationwide, which charges 5.51 percent.

First Direct has also reduced rates across its range of repayment and offset mortgages, with interest rate cuts of up to 0.4 per cent coming into effect from today.

For both new and existing customers, First Direct’s cheapest mortgage is now the five-year mortgage for those with the largest deposits, now priced at 4.74 per cent.

The most important interest rate cuts were implemented for existing customers who wanted to switch. Two-year fixed rate products now start at 5.09 percent and the lowest three-year fixed rate mortgage costs 4.99 percent.

For new customers, the largest interest rate cuts were made on the two- and three-year fixed rate agreements.

The three-year fix for those buying with at least a 40 percent deposit is now 5.19 percent, still shy of the best deals.

All eyes will now be on HSBC, which has not yet revealed details of its mortgage rate cuts and will do so tomorrow.

Stephen Perkins, director of Norwich-based Yellow Brick Mortgages, was optimistic about HSBC’s announcement.

He said: ‘Further rate cuts from HSBC would be highly appreciated, especially those in the higher loan-to-value bands.

‘This should signal the start of a new round of rate cuts, some before and some after the expected good news on inflation this week.

“With each day that passes, there are more reasons to be positive in the mortgage market.”

Craig Fish, director of London-based estate agent Lodestone Mortgages and Protection also welcomed the news:

“While we don’t know the details yet, these rate cuts from HSBC show they are intent on staying in business,” he said.

‘Let’s hope that there is some attention for those who want to take out a new mortgage and for those who borrow at a higher loan value.

“It looks like the tariff war is on.”