Halifax Shatters Records With 0.83% Mortgage

Olympic athletes toppled world record after world record last week in Tokyo, and back home in the UK, mortgage rates were setting their own records.

Just a month ago, HSBC and TSB were shocking borrowers with 0.94% mortgages, the lowest interest rate ever seen on a two-year fix in the UK. Now Halifax, the country's largest mortgage lender, has shattered that record, launching a two-year mortgage at a jaw-dropping 0.83% interest.

While many of the sub-1% mortgage rates have been reserved for remortgagers, Halifax’s deal is exclusively for home-movers and first-time buyers. Remortgagers need not apply.

You’ll need to have a 40% deposit to qualify and to be borrowing a minimum of £250,000 and a maximum of £1,000,000 from Halifax. This means the deal is only available for properties that cost at least £415,000. You also won’t be able to borrow for a new build.

While the bargain-basement interest rate will draw gawkers, the deal doesn’t make financial sense for everyone, even if you qualify. Halifax is charging a £1,499 product fee for the mortgage, 50% more than the usual £1,000 lenders charge. 

Additionally, Halifax is the only high street lender charging for a valuation of the property, with costs starting at £200. Those fees will erode some of the savings you’ll see from locking in a rock-bottom rate for two years. Brokers are thus encouraging home buyers to do the maths before jumping on an attention-grabbing deal.

And if you don’t qualify for the Halifax deal, don’t fret. With the housing market cooling following the end of the stamp holiday and the base rate still frozen at 0.1%, lenders aren’t likely to stop the mortgage price war.

As Rhys Schofield, managing director at broker Peak Mortgages and Protection, put it: “Where the UK’s largest mortgage lender goes, others will surely follow.”