- Santander has cut rates by between 0.05 and 0.56 percentage points
- The rate changes include several new best buys for homebuyers
- Its cheapest five-year fix now charges 4.64% with a £999 arrangement fee
Santander has become the latest lender to slash rates on its mortgages.
From today, the bank has cut rates by between 0.05 and 0.56 percentage points on a number of deals aimed at home buyers, those remortgaging and landlords.
It follows significant rate cuts from both Halifax and Nationwide earlier this month.
> How to remortgage your home: A guide to finding the best deal
Best rate: From today, Santander has cut rates by between 0.05 and 0.56 percentage points on a number of deals
Santander’s rate changes include three new best buys for home buyers who choose to fix for five years. All come with a £999 arrangement fee.
Its cheapest five-year fix, which is available to those buying with at least a 40 per cent deposit (60 per cent loan-to-value) has fallen from 4.95 per cent to 4.64 per cent.
> Check how much would you would pay with our best mortgage rates calculator
The average five-year fixed rate mortgage is currently 5.9 per cent, according to Moneyfacts data.
Someone buying a home with a £200,000 mortgage using Santander’s cheapest deal could expect to pay £1,128 a month, compared to the market average of £1,276 a month. That’s a saving of £148 a month, or £1,176 a year.
As for those buying with at least a 25 per cent deposit (75 per cent loan-to-value), they can now secure a market-leading 4.74 per cent rate with Santander, down from 5 per cent previously.
Those purchasing with a 10 per cent deposit can do so at a rate of 5.15 per cent. Again this is better than any other lender at the time of writing.
Those preferring to buy using a two-year fix with a 10 per cent deposit can now also secure a market-leading rate of 5.7 per cent with Santander.
Those with bigger deposits can also do well. Santander charges 5.14 per cent for its two-year fixed aimed at those buying with a 40 per cent deposit. This is only marginally bettered by TSB, which is charging 5.09 per cent.
Those with a 25 per cent deposit can secure a 5.24 per cent rate. Again, this is only bettered by TSB charging 5.14 per cent.
Santander also reduced rates aimed at those remortgaging.
Its two-year fixed rate remortgage deals are of particular note. Many borrowers are hedging their bets on interest rates falling over the next couple of years meaning two-year fixes have risen in popularity of late.
Although none are market leaders, Santander’s two-year fix for those with at least 40 per cent equity (60 per cent loan-to-value) has fallen from 5.64 per cent to 5.33 per cent.
Currently, TSB, Barclays, Nationwide and Leeds Building Society are all offering marginally lower rates.
However, given that the average two-year fixed rate deal is 6.34 per cent, according to Moneyfacts, Santander’s deals are very competitive.
Chris Sykes, mortgage consultant at Private Finance says Santander alongside other lenders are likely attempting to hit lending targets before the year ends
Chris Sykes, a mortgage consultant at broker Private Finance believes the recent flurry of rate cuts by mortgage lenders may be a sign that banks are pushing to hit their annual lending targets before the end of the year.
He says: ‘These cuts are significant. Santander have definitely had their foot off the gas pedal for a little while now and there have been much more competitive offerings elsewhere.
‘But now, it has firmly put the foot back down with today’s announcement. It is now market leading for several situations I’ve seen.
‘Maybe this is a final 2023 push for market share. Where often we see lenders being more competitive during th first half of the year and becoming less competitive in the final three months due to having hit targets, it seems we have somewhat of the opposite happening this year with many lenders not hitting the targets set for 2023.’
With around 1.6 million people due to remortgage next year, Sykes is advising them to plan ahead.
It is possible to lock in a mortgage offer six months before it needs to begin and borrowers can always then change to a cheaper deal nearer the time.
‘I would advise anyone that is coming to the end of their mortgage product in the next six months to look into it now,’ says Sykes.
‘You could always change it nearer to the time if rates improve before completion.
‘There are obviously considerations to take on this, but I’ve saved hundreds of thousands across my clients reviewing rates recently.’