Halifax hikes mortgage rates and demands bigger deposits
Halifax, the UK's biggest mortgage lender, will increase mortgage rates from Monday and ask for bigger deposits from homebuyers.
Borrowers with small deposits will face higher interest rates and on average Halifax rates will rise 0.2 per cent.
Heather Scott at Halifax said: "We are re-pricing in response to changes in the mortgage market."
She added: "We still offer mortgages at attractive rates. First-time buyers can still get up to 95 per cent loan. We are helping first-time buyers."
New products to be launched on Monday for first-time buyers would offer rates from 5.49 per cent. A five-year fixed-rate deal with an interest rate of 5.69 per cent on loans up to 90 per cent will also be launched.
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 per cent to 95 per cent.
Halifax part of the HBOS group will introduce three LTV bands so those with 25 per cent deposits or more will receive a 0.1 per cent cut interest rates.
Those with deposits under 25 per cent will face on average a 0.14 per cent increase.
Halifax claims 70 per cent of its new customers put down a deposit of more than 25 per cent.
Both Bank of Scotland and Intelligent Finance will also follow suit.
Denise Blake, senior mortgage analyst at Moneyfacts.co.uk, said: "This move by Halifax reflects the mortgage changes that we have seen over the last couple of weeks. Lenders have to balance out the risk they are taking on, so it's no surprise that Halifax are looking to attract the low risk borrowers.
"Despite these moves, Halifax continues to offer competitive mortgages, especially for those with a larger deposit. Anyone interested must act fast as competitive products are not hanging around for long."