SANTANDER is the latest lender to reduce selected fixed rates as swap rates, which fixed rate mortgages are priced off, continue to head south.
The lender has reduced its first-time buyer 2-, 3- and 5-year fixed rate mortgages at 85%, 90% and 95% loan-to-value (LTV) by up to 0.32%. Brokers said this reflects an “increasingly aggressive” strategy as lenders seek to ignite the market. It follows Nationwide cutting rates by up to 0.16% late last week.
Selected other Santander fixed rates have been reduced by up to 0.08%, while some home mover and remortgage products at lower LTVs have been increased marginally, but brokers say this is more a strategic refocusing rather than a sign of Santander being unsure as to where rates are headed.
Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Lifetime Wealth Management, said: “It’s great to see Santander slashing rates for first-time buyers by up to 0.32%. These are the people who need it the most and these reductions will really help boost affordability.
“The rate increases are negligible and a reflection of a lender simply prioritising certain products over others.”
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, a financial advisory firm, agreed.
She said: “Santander’s mixed repricing doesn’t look like a market reversal, it looks targeted. The reductions are concentrated in higher LTV and new build segments, which suggests they’re actively chasing volume in growth areas rather than reacting to a sudden funding shift. That’s not inconsistency, it’s portfolio management.”
“Aggressive” Santander cuts
Richard Davidson, Mortgage Advisor at onlinemortgageadvisor.co.uk, described the move by Santander as “aggressive”.
He said: “Santander’s larger reductions for first-time buyers align with their increasingly aggressive strategy in this space, as we’ve seen with their recent move into 98% LTV mortgages.
“They’re clearly looking to make a big mark this year and potentially undercut some of the other big lenders. The modest increases elsewhere in their portfolio are more an indication of where Santander wants to focus their firepower this year, rather than any signal on the direction of rates more generally.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said swap rates are improving and Santander is the latest lender to pass on some of those savings.
He continued: “Coming into play from Tuesday, there is a real mixture of price changes depending on the type of mortgage and the size of deposit.
“It’s good news for first-time buyers but less so for those looking to move or remortgage. Lenders are becoming more selective as to which borrower types can have access to their cheapest products, so using a broker will let you find that bargain deal from the wider market.”
Inflation data key
Meanwhile, Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, said rates could tumble further if inflation comes down on Wednesday.
She said: “Santander’s cuts for first-time buyers will be a shot across the bows for other lenders. They’re very clearly seeking to hoover up a lot of first-time buyer business and lenders who also want it will need to respond.
“Let’s hope inflation edges down this Wednesday. If so, more rate cuts should be coming in February.”
Photo by Christian Stahl on Unsplash
