Fixed-rate mortgages have dominated the market for some time, with two-year and five-year deals being the most popular. However, towards the end of 2024, Halifax challenged the status quo by introducing a shorter-term 18-month fixed-rate mortgage. But has this product filled a gap in the market or were the previous options adequate in today’s financial climate?
Interestingly, we’ve not yet seen any other lenders offering 18-month deals. There are a handful of 1-year fixed-rate mortgages currently available. Usually, however, these are only available to existing customers with good credit and at least 24% equity in their property.
How does it work?
Similarly to the 12-month fixes available on the market, Halifax’s 18-month fixed-rate deal is only available to customers looking to remortgage, not to homebuyers. If you’re looking for a short-term fix to buy a home, a wide range of 2-year fixed-rate mortgage deals are available.
The Halifax 18-month fixed-term mortgage works in the same way as any other fixed-rate deal. The interest rate is fixed for 18 months, after which you will need to remortgage onto another deal, or you’ll be transferred to their standard variable rate (SVR). The following terms apply:
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The product has a fee of £1,499
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Cashback of £250 is provided upon completion
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The maximum LTV available is 90%, however, as this level of borrowing is capped at £750,000
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The borrower must provide their own conveyancer as there is no free-legal option available with this deal
What interest rates are available?
As with all remortgage products, the Halifax 1.5-year fix is priced depending on the level of equity held in your existing home. Borrowers with at least 10% equity (90% LTV) may be eligible for the deal, but the most competitive interest rate applies to those with 40% equity (60% LTV) or higher. The £1,499 product fee applies to all deals, no matter the LTV.
Rates apply as follows:
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60% LTV - 4.37% interest
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75% LTV - 4.62% interest
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80% LTV - 5.04% interest
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85% LTV - 5.25% interest
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90% LTV - 5.63% interest - lending capped at £750,000 at this LTV
*All interest rates cited are subject to change
Our analysis
This product won’t be suitable for everyone, but it’s certainly appealing to a particular demographic. Those who are looking to move home in the next 18 months, but don’t want to fall onto their lenders' SVR during that period, could avoid paying out more interest than they need to, until they find a new home.
Alternatively, people who expect the base rate to fall further are likely to appreciate the flexibility that an 18-month fix offers. When Halifax released this deal in November 2024, the base rate was at 4.75%. Since then, we’ve already seen the Bank of England reduce it to 4.5%.
Many economists believe that it will fall further before the end of the year, and further still in 2026, with a likely knock-on effect to be seen in mortgage rates. Those borrowers taking an 18-month fix now could lock in a new rate at the beginning of 2026 - up to six months before the deal ends. If rates do continue to fall, as many anticipate, they could take advantage of lower rates sooner.
However, to play devil’s advocate, keep in mind the relatively high product fee for this deal. If the market is still in flux in 18 months and you switch to another relatively short-term fix, what you pay out in product fees may eventually negate any savings made on interest.
It’s important to speak to a mortgage broker, like ourselves, to find the right balance for your circumstances.
