Halifax has announced mortgage rate reductions of up to 0.25%, but industry experts warn that these cuts could be short-lived due to a sharp rise in swap rates following renewed tensions in the Middle East.
Rate Cuts Announced
The lender confirmed reductions of up to 0.25% on 2-, 3-, and 5-year fixed rate remortgage products, and up to 0.24% on 2- and 5-year fixed rate product transfer and further advance mortgages. Additionally, Halifax reduced rates by up to 0.05% on 2-, 3-, and 5-year Homemover and First Time Buyer fixed rates.
Swap Rates Surge
However, the 2-year SONIA swap rate rose by 13.2 basis points to 4.338%, while the 5-year swap increased by 13.6 basis points to 4.313%. These swaps are used by lenders to price fixed rate mortgages, and their rise could lead to upward repricing.
Emma Jones, Managing Director at Whenthebanksaysno.co.uk, cautioned: "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 & IFA at Roxton Wealth, described the swap rate increase as "a real warning light for borrowers" and stated: "If Middle East tensions keep pushing oil, inflation expectations and swap rates higher, some of today's cuts could disappear very quickly."
Moustafa advised borrowers: "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."
