Halifax has launched a 1.5-year fixed rate mortgage which is expected to suit borrowers who want to guarantee their rate for a shorter period.
A diversification from the traditional two- or five-year fixed rate, the new deal is available tomorrow for customers who are remortgaging.
Halifax said the customer must use their own conveyancer when taking out the deal as its own remortgage conveyancing service did not apply to these products.
However, borrowers will benefit from a £250 cashback.
The mortgage has caused a stir because a 1.5 year deal is an original concept on the mortgage market.
The only lender, according to Moneyfactscompare.co.uk’s records, which offers a similar product is Precise which has some one-year fixed deals – these start at 5.59%, and have a 1% fee.
Nicholas Mendes, mortgage technical manager at John Charcol, said: “[It] is an interesting move that not only offers clients a unique balance of stability and flexibility but also enhances their competitive edge in the remortgaging market.
“With most competitors providing a two-year fixed as the shortest term, this innovative product gives Halifax an edge in attracting remortgaging clients.”
He explained the deal allowed borrowers to lock into a fixed rate while keeping their options open for a review slightly earlier than the standard two-year term. This, he explained, was particularly appealing in the current uncertain interest rate environment.
Rohit Kohli, director at The Mortgage Stop, speaking via Newspage agency, agreed. He said: “It’s great to see innovation from a major lender like Halifax.
“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.”
Advice to borrowers about to remortgage
Mendes offered advice to those remortgaging. He said: “If your fixed-rate mortgage is ending, now is the time to explore remortgaging options. Start by reviewing your financial situation and comparing deals from both your current lender and other providers to secure a competitive rate.
“Consider consulting a mortgage broker to help you navigate the options and lock in a deal that aligns with your needs.”
Meanwhile, Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Borrowers who want to secure a fixed rate over the shorter-term could choose a one-year fixed option, as some lenders can do product transfers, but this short term is rather niche.
“Other alternatives are tracker mortgages, some of which can be more flexible for borrowers who may want to exit their deal early and don’t want to pay a charge to do so. Some borrowers might not be comfortable to tie into a longer-term fixed mortgage, particularly if they hope mortgage rates will dip down next year.”
