Leeds Building Society and Halifax have announced mortgage rate cuts on several of its products and experts believe more lenders could follow
Several high street lenders have cut mortgage rates, kicking off a potential mortgage rate war for the new year.
Leeds Building Society and Halifax have announced mortgage rate cuts on several of its products. For existing customers, Leeds Building Society has cut fixed residential interest rates by up to 0.24%, and selected Interest Only rates will drop by up to 0.15%.
New customers can also benefit, with Residential and Reach fixed rates decreasing by up to 0.21% and Interest Only rates by up to 0.15%. The reductions follow closely after Halifax, which lowered rates by up to 0.35% for those remortgaging in early 2025. Darryl Dhoffer, founder at The Mortgage Geezer, said the moves by the lenders could be the “catalyst” for many other lenders to follow suit.
Justin Moy, managing director at EHF Mortgages, told the news agency Newspage: “Early moves by Halifax and Leeds Building Society on New Year’s Eve suggest a mini rate war will rage at the start of January, which can only be great news for borrowers. With huge numbers of borrowers looking for a new deal on their mortgage in 2025, it will be important to reserve deals whilst rates are favourable, and January will be an ideal time to take advantage. Other lenders will follow in the coming days without doubt.”
David Stirling, independent financial advisor at Mint Mortgages & Protection added: “Halifax follow closely on the heels of Leeds Building Society, as both look to start the eagerly anticipated 2025 mortgage rate race ahead. The New Year should see lots of competition between the lenders, as they try and take as much market share as possible before the April Stamp Duty changes, when things are likely to dampen in the mortgage world. This is great news for borrowers looking to buy or coming off fixed rates in the early part of the year, as rates could drop lower than they have been for while.”
In December, the Bank of England opted to hold interest rates at 4.75%, although several cuts are expected this year. Mortgage rates began to drop last summer after the Central Bank made its first rate cut in four years – falling to below 4%. However, they began to climb again over the Autumn, and experts don’t believe they will drop to this level again anytime soon.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said downward pricing is likely to continue but could yo-yo over the next three months. He said: “It is only when we start getting regular base rate cuts that the market will react favourably and swap rates will fall. Until then, swaps will continue to fluctuate as much as we have seen over the past 12 months, which makes it harder for lenders to consistently offer lower mortgage rates.”
Aaron Strutt, product director at Trinity Financial, warned that the mortgage industry could be volatile and can change “very quickly” in response to any shift in the economy. He explained: “If there is some bad economic news fixed rates rise and then generally come back down again. Sub-4 per cent rates are the new benchmark for competitively priced mortgages and the hope is we will see them early next year.
“UK Finance is predicting an increase in overall mortgage lending next year also a rise in lending to borrowers buying a property. Some of the lenders are also telling us their lending targets are being increased quite substantially, which means they will have to either offer lower rates to attract more customers or ease their acceptance criteria even more.
“The cheapest rates are still available to borrowers with a 40% deposit and increasingly to those buying homes with an energy performance certificate rating of A or B.”
