Mortgages

Mortgage price war ramps up as Rishi Sunak prepares to claim inflation victory


Halifax, which is part of Lloyds Banking Group, Britain’s biggest lender, said it was cutting its mortgage rates by up to 0.46 percentage points from Wednesday.

This includes cutting a five-year fix for borrowers with a 10pc deposit by 0.24 percentage points to just under 5pc. Five-year mortgage deals for borrowers with a 40pc deposit will be reduced by 0.20 percentage points, to 4.53pc.

HSBC announced the second wave of rate cuts in a week, while the bank’s subsidiary First Direct said it was implementing the biggest round of mortgage rate cuts since February as it also launched two new mortgages for borrowers with a 5pc deposit.

Mr Mendes added that a number of mortgage lenders had started to offer terms of up to 40 years this summer to help borrowers to ensure their repayments remained affordable.

Bank of England policymakers warned this month that inflation could tick up to 5pc in January as the ongoing war in the Middle East between Israel and Hamas has pushed up gas prices.

However, Philip Shaw, an economist at Investec, said a big drop on Wednesday could nevertheless signal a major turning point in the fight against inflation.

“We would not underestimate the psychological effect on both policymakers and markets of a materially lower rate of inflation,” he said. 

Despite the optimism, analysts have also warned that another of Mr Sunak’s targets to grow the economy is now at risk after Britain stagnated in the three months to the end of September.

George Buckley, chief UK economist at Nomura, said Mr Sunak and Chancellor Jeremy Hunt were likely to be confronted by a deteriorating economic backdrop at the Autumn Statement next week.



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