Santander slashes its mortgage rates: Lender now offers three best-buy deals for movers

Santander is the latest lender to cut interest rates on its mortgages.

As of today, the bank has cut interest rates by between 0.05 and 0.56 percentage points on a range of deals aimed at homebuyers, remortgage takers and landlords.

This follows significant rate cuts from both Halifax and Nationwide earlier this month.

> How to remortgage your house: A guide to finding the best deal

Best rate: As of today, Santander has reduced rates by 0.05 to 0.56 percentage points on a range of deals

Santander’s tariff changes include three new Best Buy offers for home buyers who opt for a five-year contract term. All will be subject to a £999 processing fee.

The cheapest five-year deal, available to buyers with a deposit of at least 40 per cent (60 per cent LTV), has fallen from 4.95 per cent to 4.64 per cent.

> Check how much you would pay with our best mortgage rates calculator

According to Moneyfacts, the average five-year fixed-rate mortgage is currently 5.9 percent.

Someone buying a home with a £200,000 mortgage and Santander’s cheapest offer could expect to pay £1,128 per month, compared to the market average of £1,276 per month. That’s a saving of £148 per month or £1,176 per year.

Anyone buying with a deposit of at least 25 percent (75 percent loan-to-value) can now secure a market-leading interest rate of 4.74 percent with Santander, up from 5 percent previously.

If you buy with a 10 percent down payment, you can do so with an interest rate of 5.15 percent. Again, this is better than any other lender at the time of writing.

If you prefer to buy with a two-year term and a 10 percent deposit, you can now secure the market-leading interest rate of 5.7 percent from Santander.

Those with larger deposits can also do well. Santander charges 5.14 percent for its two-year fixed price, which is aimed at buyers with a 40 percent deposit. This is only slightly exceeded by TSB with 5.09 percent.

Anyone who has a deposit of 25 percent can secure an interest rate of 5.24 percent. Again, this is only exceeded by TSB charging 5.14 percent.

Santander also lowered interest rates for debt restructuring borrowers.

Particularly noteworthy are the two-year debt restructuring agreements with a fixed interest rate. Many borrowers expect interest rates to fall over the next few years, meaning two-year loans have become increasingly popular recently.

Although none are market leaders, Santander’s two-year fix for companies with at least 40 percent equity (60 percent loan-to-value) has fallen from 5.64 percent to 5.33 percent.

Currently TSB, Barclays, Nationwide and Leeds Building Society offer slightly lower rates.

However, given that the average two-year fixed rate contract is 6.34 percent, according to Moneyfacts, Santander’s offers are very competitive.

Chris Sykes, mortgage adviser at Private Finance, says Santander, along with other lenders, will likely try to meet lending targets before the end of the year

Chris Sykes, mortgage adviser at broker Private Finance, believes the recent spate of rate cuts by mortgage lenders could be a sign that banks are pushing to meet their annual lending targets before the end of the year.

He says: “These cuts are significant.” Santander has definitely taken its foot off the accelerator for some time and there are significantly more competitive offers elsewhere.

“But now with today’s announcement it has really stepped on the gas again.” In several situations that I have seen, it is now the market leader.

“Perhaps this is a final push in 2023 to gain market share.” While we often see lenders being more competitive in the first half of the year and losing competitiveness in the final three months due to target achievement, this year appears to be quite the opposite to happen as many lenders fail to meet their targets by 2023.’

With around 1.6 million people having to restructure their debts next year, Sykes advises them to plan ahead.

It’s possible to secure a mortgage deal six months in advance, and borrowers can then always switch to a cheaper deal at a later date.

“I would advise anyone who is reaching the end of their mortgage product in the next six months to look at it now,” says Sykes.

“They could always change it in a more timely manner if prices improve before completion.

“Of course there are considerations about this, but I have saved my clients hundreds of thousands recently by checking rates.”