Mortgage rates could “drop below 4 per cent by the end of the year”, Magni Finance director, Ashley Thomas, has argued following recent rate reductions.
Thomas’s comments come after announcements from HSBC and Halifax that they would be reducing their mortgage rates, with Halifax reducing its five-year fixed to 4.53 per cent with a £999 fee up to 60 per cent LTV.
In response, Thomas said that lenders are becoming “more aggressive with rate cuts” and, as a result, he “wouldn’t be surprised” to see rates beginning with a three by the end of the year.
Similar positivity was shared by Shaw Financial Services owner and mortgage expert, Lewis Shaw, who said: “Halifax stepping into the fray once again and dropping rates close to the 4.5 per cent mark will certainly put the cat amongst the pigeons.
“Hopefully, this adds some momentum to the market and will trigger other lenders to sharpen their pencils or risk losing out.”
Additionally, Harmony Financial Services director, Imran Hussain, stated: “With Halifax dropping rates hot on the heels of HSBC, this could send shockwaves through the lending market.”
Hussain added that the announcements could also “hopefully” inject some “much-needed momentum” into the property market.
Following suit
Several brokers also stated that other lenders are likely to follow in HSBC and Halifax’s footsteps with Blueprint Mortgages & Protection director, Kirsty Wells, commenting: “Rate reduction notification emails from lenders always put a smile on my face.
“I’m already getting excited for the new year with hopefully continued lower interest rates.
“I expect to see many more lenders follow suit as the big boys like HSBC and Halifax have both made announcements this week. Keep them coming.”
Additionally, Lucra Mortgages director, Ben Tadd, described Halifax’s announcement as a “big move” and, in conjunction with HSBC’s announcement, predicted that the rest of the big six lenders are now “highly likely” to follow suit.
“This will in turn lead to a domino effect on the rest of the market, forcing other lenders to reduce rates to stay in the game,” he said.
Remortgaging
However, Lodestone Mortgages & Protection director, Craig Fish, suggested more focus should be put on those seeking to remortgage.
“It’s such a shame that there is no focus on helping those who are looking to remortgage, which is where the real help is needed right now,” he said.
A similar sentiment was shared by Charwin Private Clients director, Ranald Mitchell, who said: “Halifax are looking to this sector of the market to get their lending moving, however their remortgage rates have remained unchanged.
“With so many people coming to the end of ultra-low rates, I would expect Halifax to be ready and competing to be the least bad option for people considering a remortgage.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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