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Santander’s two- and three-year fixed rates for residential home purchase for buyers with at 60% loan to value (LTV) have fallen to 3.97% and 3.99% respectively, both with a £999 fee.
Santander is the latest lender to offer sub-4% fixed rates for home purchase, after Barclays and Coventry BS reduced their rates last week, as the current mortgage price war intensifies.
Hina Bhudia, partner at Knight Frank Finance, said: “From rate cuts to changes to affordability criteria, the lenders are doing everything they can to win new business after years of below par results. The outlook is hugely uncertain so there is real push to make hay while they still have the scope to cut rates. This is great for borrowers for the time being, but whether it lasts will hinge on whether the trade war escalates and any subsequent impacts on bond market stability, investor sentiment and inflation. Those are big open questions.”
Nick Mendes at broker John Charcol said: “There is definitely a shift in sentiment. Where we had initially expected two interest rate cuts this year, the market is now pricing-in up to four by the end of 2025, which would take the benchmark Bank Rate to 3.5% [from its current 4.5% assuming a 0.25 percentage point cut each time].”
“Some lenders have moved quickly to offer sub-4% deals, but others may be more cautious, particularly lenders that have recently locked in business at higher rates. There is the issue of pipeline risk, with borrowers trying to switch mid-process to access better deals, which could create operational and financial challenges for lenders.”
The number of mortgages available at 90% and 95% LTV has reached the highest level in 17 years, , according to Moneyfacts.
Availability of low deposit mortgage options at 17-year high
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