Mortgage rate cuts are shaking up the mortgage market! Santander has just launched a new range of mortgage deals that could signal the start of a full scale mortgage price war. These new offerings, including two and five year fixed rate deals at just 3.99%, are already turning heads and could be a game changer for homebuyers and those looking to remortgage. Let’s take a deeper look at these mortgage rate cuts and what this means for home buyers and movers.
Why Mortgage Rate Cuts Are Happening Now
The reason we’re seeing mortgages under 4% again is largely due to the Bank of England’s recent decision to cut its base rate from 4.75% to 4.5%. As swap rates fall, banks are eager to pass these savings on to customers. Santander’s new mortgage range, which includes options for both home buyers and remortgaging homeowners, marks a significant moment in the market.
Starting Thursday, Santander will offer rates of 3.99% for both two year and five year fixed deals. However, you’ll need a 40% deposit to access these new rates, which come with application fees of £1,999 for new homebuyers and £1,749 for those remortgaging. This move is part of a wider trend expected to continue as lenders compete to offer lower rates.
A Competitive Shift in the Mortgage Market
According to experts, this move could trigger a mortgage price war, which would be great news for anyone looking to secure a better rate. Iain Swatton, director at Exemplar Financial Services, suggests that Santander’s decision might just be the spark other lenders need to follow suit, cutting their rates to stay competitive.
Rachel Springall, a finance expert at Moneyfacts, also believes that it was only a matter of time before sub 4% rates made a comeback, particularly with falling swap rates and the recent base rate cut. She’s optimistic that more lenders will jump on the bandwagon, offering attractive deals to both first-time buyers and existing homeowners looking to remortgage.
The Impact on Buyers and Homeowners
The return of sub 4% mortgage rates is fantastic news, especially for buyers and homeowners hoping to remortgage at better terms. For anyone with large loans, these low rates could mean huge savings over the long term. But while the new rates are eye catching, it’s essential to consider the total cost of the mortgage. With the higher fees attached to these deals, it’s important to calculate whether the lower interest rates will truly save you money in the end.
For those with smaller loans, a slightly higher interest rate with lower or no fees might be a better option. As always, it’s crucial to weigh your options carefully and shop around to find the best deal for your unique situation.
What’s Next in 2025?
As we move further into 2025, many experts predict that more lenders will follow Santander’s lead, offering better deals to attract business. However, the outlook for mortgage rates is still uncertain, with many factors, such as the global economy, inflation trends, and potential changes in government policy likely to influence rates in the coming months. Still, the recent downward shift in rates is promising and offers hope of further mortgage rate cuts for anyone looking to buy a home or refinance their mortgage this year.
Santander’s new offer marks a significant shift in the mortgage landscape, especially as it’s the first time since November 2024 that a high street lender has offered sub 4% rates. Whether you’re buying a home or considering remortgaging, now could be an ideal time to reassess your options and potentially lock in a lower rate. Keep an eye on the competition, as other lenders are likely to follow suit with mortgage rate cuts, and don’t forget to factor in fees to ensure you’re getting the best overall deal.
If you’re unsure which mortgage deal is right for you, it’s always worth reaching out to an expert mortgage advisor who can help you navigate the current market and find the best rates available. With the prospect of more mortgage rate cuts ahead, 2025 could be a great year to secure a more affordable mortgage.
