Lenders Face Backlash as Mortgage Rates Soar, Halifax Leads the Charge

Lenders Face Backlash as Mortgage Rates Soar, Halifax Leads the Charge

…By Henry George for TDPel Media. Halifax, the UK’s largest mortgage lender, has triggered a wave of repricing in the market, described by one broker as “absolute carnage.”

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Joining Halifax, TSB, Lloyds, Santander, and leading building societies have also raised the costs of their mortgage products once again.

Halifax announced to intermediaries that their remortgage rates would increase by up to 0.54% starting today.

Potential Market Implications

Experts in the mortgage industry have expressed concerns over the impact of these rate increases.

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Rob Gill from Altura Mortgage Finance highlighted the significant gap between Halifax’s rates for purchases and remortgages, as well as the considerable rise in product transfer rates for existing clients.

Amit Patel from Trinity Finance called the situation “absolute carnage,” suggesting that Halifax’s actions may have priced itself out of the market in an effort to safeguard its loan book and obligations to existing customers.

Continuation of Rising Rates

These developments follow the recent passing of the 6% threshold for the average five-year fixed-rate mortgage.

Moneyfacts data revealed that the average five-year deal stands at 6.02%, while two-year products now average 6.51%, up from 6.47%.

Paul Welch from LargeMortgageLoans.com attributed the continued rise in fixed rates to high SWAP rates, which banks pay to borrow money.

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He cautioned that if core inflation remains high or rises further, interest rates and SWAP rates will likely continue to climb, potentially pushing fixed rates to reach 7% by the end of the summer.

London’s Prime Property Market Resilient

Interestingly, the soaring cost of debt does not appear to be significantly affecting prices in London’s prime property market, largely due to the prevalence of cash buyers.

According to Savills, prices in this segment only experienced a marginal decline of 0.2% in the second quarter of the year, remaining 3.9% higher than pre-pandemic levels.

Frances McDonald from Savills noted that while London’s prime market continues to perform better than expected, recent interest rate increases could impact buyer budgets and increase price sensitivity, particularly in the more domestic outer prime locations where borrowers are more reliant on financing.

McDonald advised sellers to set prices pragmatically to align with buyer expectations in this evolving market.

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