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Mortgage wars: HSBC, Halifax Virgin Money and TMW pick up the pace with further rate cuts

Mortgage wars: HSBC, Halifax Virgin Money and TMW pick up the pace with further rate cuts
Matt Browning
Written By:
Matt Browning

High street banks have once again battled it out to appeal to borrowers following another big week of rate reductions.

Last week, Nationwide announced it was the first major lender to offer a two-year fix below 5%, leaving the rest of the pack behind.

But after a 0.16% and 0.17% rate cut by HSBC and Halifax, both have joined the mutual in boasting a rate beginning with a ‘4’ for the same term length.

The chunkiest price cut this week belongs to Halifax, which has gone big in dropping rates by 0.46% on its two-year fixed rate at 90% loan to value (LTV), with rates priced at 6.11%.

Those deals compare favourably to the rest of the market, according to Moneyfacts data, with two-year fixes for 95% LTV and 90% LTV standing at 6.20% and 5.91% respectively.

HSBC slashed its two-year fix up to 60% LTV for purchase and home movers to 4.59%, which includes a £999 fee, while the five-year equivalent is down to 4.59% – a decrease of 0.1%. The current average for that deal is 4.78% – down from 5.40% in 2022.

For homeowners looking to remortgage their property, a two-year fix is now available at 5.14% at 60% LTV, with a £999 fee. For a five-year alternative, customers can enjoy a rate drop of 0.21% to 4.99%.

HSBC and Halifax join Nationwide’s sub-5% club

Virgin Money couldn’t match the two-year fix sub-5% price but instead saved its biggest reductions by lowering transfer fixed rates to 4.86%. The buy-to-let alternatives have been reduced by up to 0.2% and start from 5.23%.

The lender has also made a 0.24% reduction to begin rates at 4.81% on remortgages, purchase deals and buy-to-lets with a £2,195 fee.

The Mortgage Works (TMW) slashed rates for its two-year fixed switcher product, which decreased by 0.3% to 5.49%. It contains a £1,495 fee and is available up to 65% LTV.

For a lower LTV of 55%, a five-year fix for purchase and remortgage is on offer at 4.49%, with an additional 3% fee.

‘Markets anticipating that rates have peaked’

Matt Smith, Rightmove’s mortgage expert said: “Lenders have accelerated mortgage rate reductions over the last week and this morning’s positive inflation news will only fuel confidence amongst lenders further that they can continue to drop rates over the final weeks of this year, barring any last-minute surprises.

“With the markets anticipating that rates have peaked and will fall back next year, coupled with recent positive wage data, lenders could begin to review their affordability criteria.

Smith added: “It has been a challenging year, with higher rates and the squeeze on affordability meaning that some movers have had to reassess their budgets and look at options such as extending mortgage terms or searching for cheaper properties.

“An easing of affordability criteria would be positive news for many movers looking to take out a mortgage and is a trend to watch heading into 2024.”