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Santander has cut selected fixed rates for residential purchase and remortgage, in welcome news for borrowers looking for a new home loan.
The bank, the fourth largest mortgage lender, has cut its five-year fixed rate with a £999 fee for home purchase from 4.38% to 4.28%, for buyers with at least a 40% cash deposit (60% loan to value).
Its two-year fixed rate for purchase with a £999 fee has been cut from 5.18% to 5.11% (85% LTV).
The bank’s purchase deals for new build properties have also been reduced. For example, it is now offering a deal at 95% loan to value at 5.87%. The deal has no fee and pays £250 cashback on completion.
In addition, the 95% LTV three-year new build fixed rate with no product fee and £250 cashback is 5.87%, down from 6.01%.
The rate cuts come as other lenders have been increasing their fixed rates. This is because the market increasingly feels the Bank of England won’t cut interest rates when its Monetary Policy Committee (MPC) meets on 20 June.
Previously, experts had believed rates might be cut. But it now appears rates could be higher for longer, with the market suggesting the rate cut might come at the next MPC meeting in August.
Bank of England mortgage lending statistics for the first quarter of 2024, published today (12 June), show potentially growing confidence in the housing market. The value of new mortgage commitments (lending agreed to be advanced in the coming months) increased by 30.8% from the previous quarter (Q4 2023) to £60.1 billion. This was also 31.2% greater than a year earlier.
However, the data also shows the amount of mortgage arrears is growing, as higher rates continue to bite. While the number of new arrears cases fell by 11.4% in the first three months of the year, the value of total outstanding mortgage balances with arrears increased by 4.2% on the previous quarter to £21.3 billion – 44.5% higher than the same period a year ago, when they were under £15 billion.
The Bank of England Monetary Policy Committee is next due to meet on 20 June. Bank Rate is currently 5.25%.
