Halifax forces home movers to remortgage

The UK's largest mortgage lender, Halifax, will no longer allow existing borrowers moving home to ‘port' their standard variable rate mortgage with them.

Currently, anyone coming off a fixed, tracker or discounted deal with Halifax is automatically placed on the lender’s Standard Variable Rate (SVR) of 3.5% - one of the more competitive rates available.

In the past customers have been allowed to stay on that rate if they move home. However, Halifax now insists that borrowers remortgage when they move home.

The best fixed rate remortgage for a borrower with a 15% deposit is a two-year deal at 4.89%. That equates to £867 a month on a £150,000 repayment-type mortgage, meaning borrowers pay £117 more a month than if they were on the bank’s SVR. The remortgage deal also has an arrangement fee of £999.

Of course, borrowers are not obliged to remortgage with Halifax, but can choose any deal on the market for which they qualify. Halifax will inevitably lose some customers to other lenders. However, those with little equity or deposit to put down on their next home may have little choice available.

Melanie Bien, director at Savills Private Finance, said:

"With interest rates staying low for so long, lenders are keen to get borrowers away from super-cheap SVRs which are not earning them much money.

"Preventing borrowers from porting their SVR may therefore be understandable from the lender's point of view but it is very annoying for the borrower, particularly if they don't have much equity in their home so their mortgage options are limited."

Halifax said the change was first introduced in 2008, meaning customers who took out two-year deals at the time will only now be feeling its full impact.