2024 has started off with a bang with major lenders, led by Halifax and HSBC, slashing interest rates.

We spoke recently about the potential “lender price war” and this has become very visible this week.

Lenders like Halifax have reduced rates by almost 1 percentage point and more lenders are expected to join them with reductions. We are already seeing reductions being made by specialist lenders.

These product reductions have already fed through to the average rates, as calculated by Moneyfacts Group plc with both the average two-year fixed rate and five-year fixed rate sitting at their lowest level since June.

What is a lender price war?
When the term “lender price war” is used in the context of the UK mortgage market, it refers to a competitive situation where mortgage lenders aggressively reduce their interest rates in an attempt to outdo each other and attract more customers. This scenario usually occurs when several lenders simultaneously decide to offer lower rates, leading to a cascade effect across the industry.

The competition can be sparked by various factors, such as changes in the Bank of England’s base rate, market demand, or shifts in the economic landscape.

A lender price war benefits potential borrowers as it can lead to more favorable mortgage terms, including lower interest rates and better borrowing conditions. However, it’s also a sign for consumers to carefully consider the terms and potential future changes in rates, as the lowest rate might not always equate to the best long-term deal.

Such wars are particularly significant in a fluctuating economic environment, as they can greatly influence homeowners’ decisions regarding new mortgages, refinancing, or purchasing properties.

It’s important to note that while rate cuts are widespread, they’re not uniform across all products. For tailored guidance reach out to the team on 020 3645 4322 or send me us a direct message.