Santander has just announced wide-ranging cuts to its fixed rate deals for both new and existing borrowers.
With a 5-year fixed rate for purchase clients of 4.95% at 60% loan-to-value (LTV), and a sub-5.5% 2-year fixed rate, brokers said more cuts are likely as the competition heats up.
Simon Bridgland, director of Canterbury-based broker, Release Freedom, said: “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.”
His views were shared by Michelle Lawson, director at Fareham-based broker, Lawson Financial: “This is great news for the industry and other lenders will have to follow. Hopefully we will start to see some confidence and stability return to the mortgage and property markets.”
Richard Campo, founder of London-based Rose Capital Partners, also welcomed the announcement: “Santander are the latest to enter the hallowed ground of lenders who offer a mortgage that starts with a 4 and I feel they are far from being last. As money markets continue to fall, and lender competition hots up, I expect all major lenders to follow suit.”
David Walsh, director at London-based broker, Kite Mortgages, also said falling money market costs and rising competition are driving the rate changes: “With swap rates coming down, this is clearly now being passed onto end borrowers, which is great news. There is always competition between lenders who all have targets to meet, so they will want to be as competitive on price as they can be, whilst maintaining their margins.”
Meanwhile, Justin Moy, founder at Chelmsford-based mortgage broker, EHF Mortgages, said last week’s inflation data and Bank of England interest rate decision also played a role: “This is a positive move by Santander, with leading deals on both 2-year and 5-year products. Sub-5% lending is a significant move fuelled by the Bank of England hold on the base rate, and better-than-expected inflation figures. Competition in the market will mean that other lenders will follow throughout the week, as they all clamber for business in the run-up to Q4.”
But for borrowers, added Campo, the speed with which rates are changing can be challenging: “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.”
