Two lenders ring in 2025 with mortgage charge cuts – will different banks observe?

  • One lender is cutting rates by up to 0.35% and the other by up to 0.24% 

Two mortgage lenders have announced they will be cutting rates on some of their fixed home loans. 

Halifax will make interest rate cuts of up to 0.35 per cent from tomorrow, while Leeds Building Society will reduce its rates by up to 0.24 per cent.

Most households with a good credit record can secure a mortgage rate of between 4 and 5 per cent at the moment.

The lowest fixed rate deals remain just above 4 per cent, with five-year fixes slightly cheaper than more popular two-year deals.

> The first-time buyer’s step-by-step guide – what you need to know 

Off with a bang: From tomorrow Halifax is cutting remortgage rates  by up to 0.35 percentage points for new customers

There is expected to be more appetite for new mortgages in 2025, with UK Finance forecasting a 10 per cent rise in lending for house purchases and a 30 per cent increase in remortgage lending.

At present, a household with at least 40 per cent equity built up in their home can secure remortgage rates as low as 4.08 per cent when fixing for five years.

On a £200,000 mortgage that would equate to £1,065 a month for five years, based on a 25 year repayment term. 

Halifax says tomorrow’s rate changes will only apply to 18 month and three year remortgage products only.

Its lowest 18-month fixed rate will drop to 4.22 per cent tomorrow while its lowest three year fix will fall to 4.41 per cent. 

Mortgage brokers welcomed both Halifax and Leeds Building Society’s cuts, and said the moves could act as a catalyst for further rate reductions in January.

Darryl Dhoffer, founder at The Mortgage Geezer told the news agency, Newspage: ‘Halifax is the first big lender to fly out of the blocks in 2025, reducing interest rates for those remortgaging. 

‘This could be the catalyst for many other lenders to follow suit as lenders will want to start the new year positively. Expect more cuts from lenders later this week and next.’

Justin Moy, managing director at EHF Mortgages added: ‘Early moves by Halifax and Leeds Building Society on New Year’s Eve suggest a mini rate war will rage at the start of January, which can only be great news for borrowers. 

‘With huge numbers of borrowers looking for a new deal on their mortgage in 2025, it will be important to reserve deals whilst rates are favourable, and January will be an ideal time to take advantage. Other lenders will follow in the coming days without doubt.’

How to find a new mortgage

Borrowers who need a mortgage because their current fixed rate deal is ending, or they are buying a home, should explore their options as soon as possible.

Quick mortgage finder links with This is Money’s partner L&C

> Mortgage rates calculator

> Find the right mortgage for you 

What if I need to remortgage? 

Borrowers should compare rates, speak to a mortgage broker and be prepared to act.

Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it.

Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying expensive arrangement fees.

Keep in mind that by doing this and not clearing the fee on completion, interest will be paid on the fee amount over the entire term of the loan, so this may not be the best option for everyone. 

What if I am buying a home? 

Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. 

Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people’s borrowing ability and buying power.

How to compare mortgage costs 

The best way to compare mortgage costs and find the right deal for you is to speak to a broker.

This is Money has a long-standing partnership with fee-free broker L&C, to provide you with fee-free expert mortgage advice.

Interested in seeing today’s best mortgage rates? Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.

If you’re ready to find your next mortgage, why not use L&C’s online Mortgage Finder. It will search 1,000’s of deals from more than 90 different lenders to discover the best deal for you.

> Find your best mortgage deal with This is Money and L&C

Be aware that rates can change quickly, however, and so if you need a mortgage or want to compare rates, speak to L&C as soon as possible, so they can help you find the right mortgage for you. 

Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage