Was Halifax rate reduction just a cynical marketing ploy?

Last week Halifax - previously an outlier amongst major lenders - announced it was raising rates, following the likes of Santander, HSBC, Virgin Money and TSB.

Some analysts believe that shows its move 10 days ago to cut rates just as competitors were increasing theirs, may have been nothing more than a cynical marketing ploy.

It is scarcely more than a week since Halifax reduced rates on selected fixed-rate products including homebuyer products such as those for first-time buyers, large loans, New Build, and Affordable Housing including Shared Equity/Shared Ownership, plus corresponding Green Home products. Remortgage products also saw reductions in rates for large loans, Affordable Housing, and equivalent Green Home products.

However, some brokers now say this was merely a bid to increase market share, and news in the second half of last week that Halifax was increasing rates after all, would lend credence to the theory. 

People taking out new loans or re-mortgaging through Halifax hit rises of between 0.18 and 0.29 per cent from last Friday, although remortgages where the loan-to-value was 90 per cent did enjoy a small rate reduction.

Charles Breen, founder at Montgomery Financial, told Newspage: “It was inevitable that Halifax would make such a move, when all their direct rivals had increased they couldn’t be the outlier. Just to manage business volumes and service levels alone they were forced into this move. Hopefully this is a temporary blip and that hostilities will resume shortly in the current rate war”

Meanwhile Robert Timm, managing director at Sunland Mortgages Limited, comments: “There’s a bit of respite for remortgaging at higher loan-to-value levels, but a quick check of these rates show they are already quite uncompetitive in this space, so is only really bringing them in line with other lenders. After a sweet start to 2024, the mortgage mood has soured.”

And Ranald Mitchell, director at Charwin Private Clients, sees it this way: “Halifax did seem out of step with the majority of the market last week, reducing rates when everyone else was pushing them up. They’ll likely have received a lot of applications as a result, meaning they’ve had to rejoin the pack to slow business volumes. Their rate changes will affect new and existing borrowers alike as the rate rollercoaster shows no signs of slowing.”