Is this the end of the road for those eye-catching rates below the 4% threshold?
Santander will withdraw its recently launched five-year fixed rate mortgage and product transfer deals at 3.99% for both intermediary and direct borrowers.
The offer, introduced last week, will no longer be available after 10pm tomorrow, February 21.
The high street lender attributed the decision to “a recent increase in five-year market swap rates,” according to a note sent to brokers. The bank’s two-year fixed rate at 3.99% remains unchanged.
The withdrawal affects new business deals, including a 60% loan-to-value (LTV) five-year fixed rate at 3.99% with a £1,749 fee for remortgages, and a 60% LTV five-year fixed rate at 3.99% with a £1,999 fee for purchases. For product transfers, the changes apply to 60% and 75% LTV five-year fixed rates at 3.99%, each with a £1,749 fee.
Santander UK became the first major lender to introduce mortgage rates below 4% this year.
“Yesterday’s news of the increase in the rate of inflation meant that some of the lowest fixed mortgage rates on the market could be under threat,” commented David Hollingworth, associate director at L&C Mortgages. “That hasn’t taken long to feed through, and Santander has announced that it will be withdrawing its five-year fix at 3.99% at the end of tomorrow, citing an increase in market rates as the driver.
“It’s not all bad news. Barclays has managed to find room for improvement in its existing customer products and Nationwide has also announced their intent to cut rates from tomorrow.”
According to Hollingworth, while the movement in swap rates – a key indicator for fixed mortgage rates – has not been enormous, it does look to be enough to put some of the very lowest rates in peril.
“It’s not a need for panic but borrowers that have been considering a new deal may want to reach a decision sooner rather than later in case of more movement in rates,” he said. “The constant shift in mortgage rates can be frustrating, but the good news is that the longer-term expectation for Bank of England base rate is that it will continue downwards as the year progresses. What we don’t know is when it will next fall and how far.”
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