Major Santander change from Friday – what customers need to know | Personal Finance | Finance

Many Brits have been handed a rare piece of good news after Santander announced a major change from Friday.

The lender is reducing selected residential and buy-to-let mortgage rates, with some first-time buyer deals falling by as much as 0.23 percentage points. Santander’s 85%, 90% and 95% loan-to-value fixed-rate products for first-time buyers are among those being cut, alongside selected buy-to-let product transfer rates by up to 0.10 percentage points. The move comes just days after inflation unexpectedly eased to 2.8% in April from 3.3% in March – fuelling hopes that mortgage pricing pressures could begin to soften.

But brokers warned borrowers not to assume the cuts mark the start of a sustained downward trend, with global instability and volatile swap markets continuing to create uncertainty.

In a sign of how unpredictable the market has become, NatWest increased mortgage rates across its range this week, citing ongoing geopolitical tensions and wider economic uncertainty.

Shaun Sturgess, director at Sturgess Mortgage Solutions, warned borrowers against becoming too optimistic. He said: “A big lender cutting rates is great news but there’s a risk some borrowers will believe rates will continue to edge down.

“The inflation data is a wolf in sheep’s clothing for borrowers, as it masks the full impact of the fuel crisis caused by events in the Middle East and the fact that inflation could rise sharply over the summer. That could send rates higher rather than lower.”

Omer Mehmet, managing director at Trinity Finance, told Newspage borrowers were being pulled in opposite directions by lenders making conflicting moves. He said: “This week we’ve had one major high street lender, NatWest, raise rates while another has brought them down. The lower rates that many borrowers are holding out for are by no means guaranteed.”

Riz Malik, of R3 Wealth, described Santander’s reductions as ‘decent’ and said any relief would be welcomed by households looking to refinance.

“Every little helps at the moment for those looking to move or refinance their existing borrowing,” he said. Mortgage adviser Martin Rayner said lenders were not simply reacting to swap rates – but also to demand levels.

“If a lender needs applications, rates come down. If they become too busy, rates can rise quickly to slow demand and protect turnaround times,” he said. He urged homeowners nearing the end of a fixed deal to lock in rates early.

“Secure the safety net first. Then benefit from any reductions afterwards,” he added. David Stirling, of Mint Wealth, said Santander had gone against the grain of the wider market.

He said: “Santander has done the unthinkable and actually cut its mortgage rates, putting it firmly at odds with the prevailing mood on the high street. Santander’s cuts are a rare flash of good news. Just don’t expect it to last.”

Ken James, director at Contractor Mortgage Services, described current conditions as a “yo-yo market”. He said: “It’s hard enough for us mortgage brokers to keep up so imagine how confusing this yo-yo market must feel for anyone trying to buy right now.”

Aaron Strutt, product and communications director at Trinity Financial, said fierce competition between major lenders appeared to be driving the latest cuts. He pointed out that Nationwide Building Society is currently offering two-year fixed deals from 4.35% and five-year fixes from 4.44%.

He added: “There were expectations that rates were going to rise in recent weeks, but the opposite has happened. Mortgages have got cheaper and they look better value for money.”