Meanwhile, smaller lenders continue to slash interest rates
Santander has increased mortgage rates while fintech lenders MPowered Mortgages and Gen H have both decreased rates, following the recent Bank of England base rate reduction from 5.00% to 4.75%.
Santander raised interest rates across many of its residential and buy-to-let (BTL) fixed rate products for new and existing customers by up to 31 basis points (bps).
For new business, the high street lender has increased selected standard residential fixed rates for purchases, remortgages, and green products by up to 29bps. All large loan fixed rates have also been raised by up to 20bps, and new build fixed rates have gone up by as much as 26bps. Selected BTL and green BTL fixed rates have also been increased by up to 31bps.
Product transfer rates are affected as well, with selected residential fixed rates increasing by up to 26bps and BTL fixed rates rising by up to 31bps.
While the lender is increasing fixed rates, it is reducing tracker rates to align with the recent Bank of England base rate cut. Tracker pay rates on new business and product transfer deals are dropping by 25bps, and Santander’s standard variable rate (SVR) will also decrease by 25bps to 7.00%. Existing customers on a base rate tracker or Santander’s Follow-on Rate will see their rates decrease from December 3.
“While the Bank of England’s decision to lower the bank rate last week might lead some to expect across-the-board reductions in mortgage rates, it’s important to understand that the mortgage market doesn’t always move in perfect sync with the Bank of England’s base rate decision,” commented John Fraser-Tucker, head of mortgages at broker Mojo Mortgages said.
“Fixed-rate mortgages, in particular, are influenced by a complex array of factors beyond just the bank rate. These can include the lender’s own funding costs, their view on future economic conditions, competitive positioning in the market, and even their internal goals for new business. In Santander’s case, their decision to increase some fixed rates, despite the recent bank rate reduction, could be driven by any number of these factors.”
In contrast to Santander’s increases, MPowered Mortgages announced reductions across its two- and three-year fixed rates by up to 0.28% for new purchase and remortgage customers.
The lender’s two-year fixed rates now start at 4.21% for 60% loan-to-value (LTV), while three-year rates start at 4.19% for the same LTV tier. Last week, MPowered also cut its SVR by 75bps to 6.74%, making it one of the lowest in the market.
Gen H also announced modest rate cuts, reducing its homebuying bundle and retention rates, with discounts of up to 9bps for bundles at 85% LTV and 14bps for bundles at 90% and 95% LTV.
Gen H’s homebuying bundle combines a mortgage with conveyancing services provided by Gen H Legal, the lender's specialised conveyancing firm.
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