Halifax has announced that reducing prices at bi-annual and three-year fixed rate mortgages, but increasing the costs of five-year solutions.
The High Street mortgage provider is not the only one who takes on this price tactics. BM solutions Die, just like Halifax, is part of the Lloyds Banking Group introduces selected buy-to-let cuts to 0.33%, but increases the rates for fixed remortgages of five years.
The fact that these lenders lowers the price of shorter fixed mortgages, but increasing interest on equivalents is seen as further evidence in the longer term The interest rates will fall this year.
Speaking with the newspaper agency, Sean Horton, managing director at Respect Mortgages Explained: “This is classic swap speed signaling. Lenders see a better value at the short end of the curve, which suggests that markets are expecting base crossing this year, but are less certainly around 2026.
“The split prices tells us that banks think that inflation can be stubborn in the medium term.
“For borrowers, this now creates an interesting dilemma suit a cheaper two-year-old deal, but risk higher rates when remorting, or pay more for five-year security? Expect more money lenders will follow the example.
“The message is clear: in the short term security but caution in the longer term. Smart borrowers must think carefully about their risky appetite, affordability and future plans before being lured by that head of two years.”
Two years versus five fixed rates
For two and a half years, the average rate of two years of fixed mortgage products is higher than five years of deals.
But the gap between the two is reduced according to data released last week from Money Facts that showed that the average fixed rate of two years is 0.17% higher than the five -year version. This is the lowest margin since January 2023 when it was 0.16%.
It is expected that the Bank of England will only lower the interest rates for at least May, but economists predict that there will be one or two tariff reductions below.
You can find out more about the advantages and disadvantages of Biennial and five-year fixed rates in this article. Everyone who is not sure of the best option is encouraged to talk to a mortgage broker for advice.