A MORTGAGE rate war is now well underway, brokers have declared, as Santander has this afternoon announced a market-leading 3.51% fixed rate mortgage.
But there’s a catch on the new residential home mover 2- and 5-year fixed rate, which goes live on Tuesday.
It’s only available at 60% and 75% loan-to-value (LTV) and commands a £1,999 fee, albeit with £250 cashback. It’s also only available on loan sizes between £500,000 and £2 million.
Responding to the announcement, Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, said: “On the surface, Santander’s 3.51% rate looks like a cracking move and a real show of confidence from lenders as we head into the festive season.
“The catch? It comes with a £1,999 fee and only applies to loans between £500,000 and £2 million, so it’s hardly one for the average South Wales buyer.
“In Swansea, you’d be hard-pressed to find many opportunities to borrow at that level. That said, moves like this tend to ripple through the market and could spark some healthy festive competition among lenders — great news for anyone looking to secure a deal before the year is out.”
Jack Tutton, Director at Fareham-based SJ Mortgages, said the rate cuts keep on coming, as Santander has followed Nationwide yesterday with some aggressive cuts: “Just as the UK temperature starts to dip, Santander are hot on the heels of Nationwide to bring some much-needed heat to the mortgage market.
“Over the past two days, both Santander and Nationwide have made large reductions in their rates, which will be welcomed by mortgage holders.
“With the cost of borrowing continuing to fall, more lenders should start to reduce their offerings, which could make for a competitive rate war as the year ends.”
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, was like a kid on Christmas Eve.
He said: “Mortgage lenders are getting ready for 2026 and Santander, on this evidence, wants to get in early. With next year being a big renewal year for many borrowers as they come off ultra-low fixed rates, some have just been delivered an early Christmas present from Santander.”
Meanwhile, Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said: “Santander has just thrown a huge snowball into the mortgage market, and it’s kicked off an all-out winter rate fight.”
He continued: “These aren’t quiet tweaks. They’re crowd-pleasing cuts from a lender that clearly wants to dominate the home-mover space. When a bank of this size starts slashing rates and adding cashback sweeteners, it tells you the mood of the market has flipped.
“Lenders are hungry, borrowers suddenly have real power again, and 2026 is shaping up to explode out of the blocks. For anyone looking to move home, this is the best tailwind we’ve seen in months and it’s only going to get better.”
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, agreed: “Santa seems to have arrived early, with Santander breaking the ice and rolling out some red-hot mortgage deals.
“Several of the products come with minimum loans of £500k up to £2m, suggesting they’re aiming to tempt buyers who’ve been hesitating ahead of the Budget. We may see lenders racing to meet their year-end targets over the next few weeks. 2025 isn’t quite finished yet, and 2026 is looking quietly optimistic.”
Photo by Rayia Soderberg on Unsplash
