Lenders begin year by slashing mortgage rates

Halifax and Leeds Building Society have both cut their mortgage rates to start the year, indicating that there could be more competition amongst lenders this year.

Halifax cut rates by up to 0.83% for 2-year fixed rates, from 5.64% to 4.81%, as well as by 0.92% for those who are remortgaging.

Meanwhile Leeds cut rates on 90 deals by up to 0.49%, bring the cheapest 2-year fixed rate to 4.6%.

David Hollingworth, associate director at L&C Mortgages, told MSN: “Being the biggest lender, it’s always worth noting moves from Halifax and should set the tone for the New Year.

“I think that the Halifax move is likely to be the first of many as swap rates have dropped again over the festive break, as markets look convinced that interest rates will be cut.

“That should feed through in the form of more cuts to fixed rates.”

Lenders are able to cheapen up their rates due to falling swap rates, which influence their cost of funding.

Swap rates are generally based on government bonds called Gilt yields, which reflect what the market anticipates will happen to interest rates down the line. They’re currently falling in anticipation of the Bank of England cutting the base rate in 2024.

The CPI inflation rate fell by 0.5% to 4.2% in November, indicating that it’s getting closer to the Bank’s 2% target.