Home loan giant Halifax is launching a new and unusually short, fixed rate mortgage to help buyers worried about interest rate volatility.
The interest rate will be fixed for 1.5 years rather than the conventional two, three or five years. The new deal comes against the background of reports that mortgage rates are relatively high at the moment and likely to fall over the next few years.
Launching a fixed rate running for 18 months means people looking to buy now can look forward to remortgaging onto a lower rate when it comes to an end, presuming forecasts prove to be accurate.
The new shorter term mortgage comes with £250 cashback, however, there is one significant drawback as buyers will have to find their own solicitor to manage the deal, rather than relying on a free service provided by the Halifax.
Mortgage brokers welcome the move, however some suggested it was a stunt.
Iain Swatton, Director at Exemplar Financial Services, said: “Halifax’s 1.5-year fixed rate seems like a savvy play for borrowers betting on future rate cuts without committing to a long-term fix.
“By skipping free legals, Halifax appears to be weeding out speculative applications, but the cashback offer softens the blow for genuine borrowers.
“ It’s a calculated move that offers flexibility and shows Halifax is tuned into market sentiment. The question now is whether borrowers are ready to buy into this short-term strategy.”
Harps Garcha, Director at Brooklyns Financial, said: “This is an innovative step forward by the Halifax. However, what’s particularly puzzling is the absence of 1-year fixed rate options.
“Are they anticipating something on the horizon that we mere mortal brokers aren’t privy to? It raises questions about whether this move reflects deeper market insight, or if it’s simply a reaction to current market conditions and demand.”
There has been mounting confusion over the path of interest rates give the fact that major lenders can’t agree themselves. Just this week Barclays announced some rate cuts while Santander increased some of theirs.
Jack Tutton, Director at SJ Mortgages, said: “This is an intriguing innovation from Halifax and it will be interesting to see how well it is received.
“With the forecasted base rate reductions for next year, we have seen a rise in the number of people looking for shorter fixed rate products. This product will allow them to review their mortgage at an earlier opportunity in the hope that interest rates are lower, which could be very attractive to some.”
Tony Castle, Managing Director at PFG Mortgages, said: “”We often see smaller building societies coming out with niche products in the market, so it great to see Halifax bring this 1.5 year fixed rate to the market. It could be very well suited to borrowers not wanting to fix for a prolonged period.”
Ranald Mitchell, Director at Charwin Mortgages, described the deal as a “lifeline to those navigating today’s uncertainty, providing the chance to lock in for a shorter period and reassess their options sooner”.
Rohit Kohli, Director at The Mortgage Stop, said: “This 1.5-year fixed product is clearly designed for those hoping rates will fall in the next couple of years, giving them flexibility without committing to a long-term deal. However, the devil will be in the detail—particularly around exit fees—which will determine how appealing this option really is.”
Justin Moy, Managing Director at EHF Mortgages, was sceptical about the appeal of the deal.
“I must admit I haven’t seen any clients looking for an 18-month product, whereas the market is really looking for cheaper rates,” he said.
And Elliott Culley, Director at Switch Mortgage Finance, said: “I can’t imagine there will be a huge uptake on this product. I have not had clients asking me for this type of product in the past so we shall see how it fares. It will depend on the pricing, but if it is more expensive than a 2 year fixed and the fees are high, I can imagine most will want to stick with the more traditional product.”
