Santander has announced a further round of rate reductions of up to 0.20%, which will go live from Tuesday 22nd August.
New first-time buyer fixed rates are also available up to 95% loan-to-value as well as a new new build range.
Buy-to-let rates are also being cut by the high street lender with reductions of between 0.04% and 0.20%.
Free UK news agency, Newspage, asked brokers why lenders are reducing rates given that the base rate is expected to rise further, whether we could see reductions from other lenders and if we are now in a mortgage price war.
Here’s what they had to say.
Jamie Lennox, director at Dimora Mortgages:
“It’s great to see another Big 6 lender return with further rate reductions despite plenty of uncertainty remaining around core inflation and how high the base rate may still need to go. We may see other lenders follow suit. Mortgage lending has slowed noticeably over the summer holidays and we could see more lenders fight it out to gain market share from a reduced pool of people seeking mortgages.”
Ashley Thomas, director at Magni Finance:
“Though this is welcome news, the mortgage market remains highly uncertain and volatile. Inflation has come down but this was expected. I expect to see more lenders look to reduce their rates as they increased them significantly in the past two months or so. Perhaps what we’re seeing is a reaction to an over-reaction.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“It’s excellent news to see further lender rate reductions on the back of the recent inflation and wage data. It shows that the lender rate war is still ongoing to the benefit of all homeowners. Crucially, it also highlights that lenders still have market confidence even with another likely Bank of England base rate hike at the next meeting.”
Samuel Mather-Holgate, independent financial advisor at Mather and Murray Financial:
“Lenders are still trying to attract new business by cutting rates for borrowers, but this won’t last. Whilst new lending has nearly dried up, lenders have the appetite to take on borrowers with little margin in their pricing, but with inflation staying high and a central bank more likely to increase rates rather than cut them, rates won’t continue to be cut for much longer. Until the Bank of England starts cutting rates, which should be later this year, borrowers face uncertainty around which direction the cost of borrowing money will go.”
Justin Moy, managing director at EHF Mortgages:
“This is a welcome move from Santander, especially when some smaller lenders have actually increased their rates over the past few days. Lenders are still looking to grab some market share. Santander is also passing on some savings to existing borrowers, too, to retain their clients. Everything is uncertain at the moment. It’s hard to predict how any of the main lenders will react, but this might keep them on their toes for a little while longer.”
Ranald Mitchell, director at Charwin Private Clients:
“The fight continues for market share and it’s worth noting that buy-to-let rates are dropping too. With so many landlords being hammered, perhaps Santander sees an opportunity to grow their share of the market with property investors. Either way, rate decreases are great news for everyone and underline how mortgage lending targets remain way off course as demand for higher interest borrowing is low.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“You can only commend lenders’ action on the rate reductions we’re currently seeing. You get the impression that escalated rates over the past eight weeks have been reactive, and we are now seeing similar rate reductions. It will be interesting to see how long these rate reductions carry on for. I suggest make hay while the sun shines, as next month could be a lot different.”
Ben Tadd. director at Lucra Mortgages:
“This is further positive news for the mortgage market in what is a very uncertain period. Following recent wage price growth and inflation data, which have created new concerns about further base rate rises, Santander has ensured the rate war we have witnessed over the last 3-4 weeks will continue, for now at least. It will be interesting to now see how the other big six lenders react this week with their pricing strategies.”
