Mortgage rates reshuffled at Halifax

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by Kay Murchie

Halifax has announced it will increase its mortgage rates for those without a 25% deposit. The reshuffle at Britain’s biggest mortgage lender will affect nearly a third of potential new customers.

The decision follows the announcement from Nationwide Building Society’s who said it will add a premium to its mortgage rates for those who need to borrow more than 75% of a home’s value.

Under the changes, the highest loan-to-value (LTV) rate, the amount that can be borrowed against the value of the property, has been dropped from 97% to 95%.

Furthermore, it will introduce three LTV bands so those with 25% deposits or more will receive a 0.1% cut interest rates.

Those with deposits below 25% will face on average a 0.14% increase. Halifax claims 70% of its new customers put down a deposit of over 25%.

The new rates will come into effect today and also apply to Bank of Scotland and Intelligent Finance.

A spokesperson for Halifax denied the lender had been overwhelmed by applications and increases in business as other lenders increased rates was a case of swings and roundabouts. We are re-pricing in response to changes in the mortgage market, said the spokesperson.

We still offer mortgages at attractive rates. First-time buyers can still get up to a 95% loan. We are helping first-time buyers, said the lender.

The move comes after many lenders have scrapped cheap mortgage offers amid the current credit crunch. Internet bank, first direct, announced last week that it has temporarily withdrawn all its mortgage products as it tries to clear a backlog of customer applications.