It is also reducing all residential and BTL fixed rates across its new business and product transfer ranges
Santander has announced that it is launching a 4.95% residential five-year fixed rate for purchase clients, with new and reduced existing rates available from tomorrow, September 26.
The high street lender is also launching a 5.43% two-year deal for purchase clients – both new products at 60% loan-to-value come with a £999 product fee.
Santander is also reducing all residential and buy-to-let fixed rates across its new business and product transfer ranges.
On the new business range, all standard residential, new build exclusive, residential large loan exclusive, and buy-to-let fixed rates will be cut by between 0.03% and 0.5%.
For product transfers, all residential fixed rates will be reduced by between 0.10% and 0.36% while all buy-to-let fixed rates will be slashed by between 0.05% and 0.45%.
Santander said there would be no changes to residential or buy-to-let tracker rates in the new business and product transfer ranges.
Brokers sought for comments by news agency Newspage believe more cuts are likely as the competition heats up.
“Sub-5% deals are very welcome, and hopefully, this will give some confidence to people who are otherwise delaying with purchases,” James Bull, mortgage broker at JB Mortgages, said. “I look forward to other lenders responding and hope rates settle around 4.5%.”
For Simon Bridgland, broker and director at Release Freedom, this week’s mortgage market melee has formally started.
“I expect things to end up looking rather attractive by the time the week is out,” he added.
David Walsh, director at Kite Mortgages, said that the decrease in swap rates and therefore the cost of borrowing to lenders, is now clearly now being passed on to end borrowers.
“There is always competition between lenders who all have lending targets to meet, so they will want to be as competitive on price as they can be, while maintaining their margins,” Walsh pointed out.
Richard Campo, founder at Rose Capital Partners, agreed, saying that as money markets continue to fall and lender competition heats up, all major lenders are expected to follow suit in reducing mortgage rates.
“Santander is just the latest lender to enter the hallowed ground of lenders who offer a mortgage that starts with a ‘four’, and I feel they are far from being last,” Campo continued.
“This is a very challenging dynamic for any borrower who wants a fixed rate at present as you are effectively playing Whack-A-Mole with your application. The good news is that the recently introduced Mortgage Charter means you can benefit from a rate cut if your existing lender lowers their rates prior to completion.
“Depending on where you are in the process, that may be an issue if lender B offers a better deal that you qualify for, it may not be practical to re-apply to a new lender if you are too close to completion, typically two to four weeks depending on the lender. Therefore, penalty free and/or variable rates may well be the way to go until pricing levels out.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
