Halifax and First Direct join other lenders in announcing mortgage rate cuts

Halifax has joined a stream of major lenders in announcing cuts to mortgage interest rates (Mike Egerton/PA)
Halifax has joined a stream of major lenders in announcing cuts to mortgage interest rates (Mike Egerton/PA)

Halifax and First Direct have joined a stream of major lenders in announcing cuts to their mortgage rates.

Halifax said it is reducing five-year fixed-rate mortgages by up to 0.71 percentage points, and two-year fixed-rate loans will fall by as much as 0.27 percentage points.

The cuts will take effect from Friday.

Halifax is part of Lloyds Banking Group, which remained the UK’s biggest mortgage lender last year, lending £52.7 billion in 2022, according to figures from trade association UK Finance.

First Direct said it has reduced rates across more than 20 of its two-, five- and 10-year fixed-rate mortgages by up to 0.20 percentage points, with immediate effect.

Chief executive Chris Pitt said: “Raising the money to buy a home can be a challenge at the moment and we want to help.”

Several major mortgage lenders have been cutting rates this week, amid signs that stubbornly high inflation is easing.

The Bank of England uses base rate rises, which affect borrowing costs, as a tool to subdue inflation.

Among the rate reductions, HSBC UK has cut some homebuyer, first-time buyer and remortgage rates on offer by up to 0.35 percentage points, as well as adding a £500 cashback incentive to some deals.

Nationwide Building Society previously announced reductions of up to 0.55 percentage points on its fixed mortgage products from Wednesday.

And, earlier this week, TSB announced reductions of up to 0.40 percentage points to selected five-year fixed homeowner mortgages, with rates starting from 5.44%.

Swap rates, which underpin fixed mortgage rates, have stabilised amid expectations that inflation is cooling.

UK Consumer Prices Index (CPI) inflation was 7.9% in June, slowing from 8.7% in May, according to the Office for National Statistics (ONS). This has fuelled expectations that the base rate may not need to climb so high.

Last week, the Bank of England raised the base rate from 5.00% to 5.25% – the 14th increase in a row.

According to, the average two-year fixed residential mortgage rate on Thursday is 6.83%, unchanged from Wednesday.

The average five-year fixed residential mortgage rate is 6.33%, down from an average rate of 6.34% on Wednesday.

Emily Williams, director of research at estate agent Savills, said: “The cuts in mortgage rates announced today by major lenders reflect the increasing and much-needed market certainty that the Bank of England base rate is nearing its peak.

“This will ease some of the affordability challenges faced by buyers and bring more confidence to the market, but we expect downwards pressure on pricing and activity to persist for the remainder of the year.”

She added: “Demand in the first half of the year has been stronger than many expected. Cash buyers have remained very active, increasing their share of transactions to 46% in April, up from 34% in late 2022.

“First-time buyers are also still keen to get on the housing ladder given the pressures in the rental market. But to manage the increasing cost of debt, they have been extending loan terms – the average first-time buyer term length in (the first quarter of) 2023 was 31 years.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The relative stability in Swap rates, which underpin the pricing of fixed-rate mortgages, has given a growing number of lenders confidence as to where they can price their products.

“Those who have made reductions to their rates should be applauded for doing so and hopefully those who haven’t will follow soon.”