Discover the recent mortgage rate reductions introduced by Santander in August 2023. Explore how these cuts could impact borrowers and the evolving mortgage market. Stay informed on the latest changes in interest rates
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Santander has declared another series of reductions in mortgage rates this week, with certain product interest rates seeing a decline of up to 0.2 percent. This announcement comes shortly after the bank’s previous round of rate reductions a week ago, during which interest rates decreased by a range of 0.05 to 0.29 percent on specific products.
The updated rates took effect on Tuesday, August 22, and specific details regarding various loan values can be accessed on their website. According to a statement on Santander’s official site, “Starting August 22, we are lowering fixed rates for both residential and Buy to Let mortgages in our new business and product transfer categories. We are introducing exclusive offers for first-time buyers (FTBs) in the new business range, featuring £500 cashback and no product fees. Additionally, we are launching a new selection of three-year fixed rate options for residential properties with no product fees, available to both purchasing and remortgaging clients.”
The statement went on to elaborate: “We are replacing the 2.5-year fixed New Build range with fresh three-year fixed rate alternatives. We are also introducing new Buy to Let choices, including a £749 product fee for new business and product transfer clients, along with options of £0 and £1,749 product fees, contingent on the loan size.”
Offering insights on these new rates, Jamie Lennox, director at Dimora Mortgages, expressed, “It’s encouraging to witness another major lender implementing further rate reductions, despite ongoing uncertainties concerning core inflation and the potential trajectory of the Base Rate. We might observe a ripple effect with other lenders following suit. Mortgage activity has notably slowed down during the summer vacation period, potentially prompting more lenders to vie for market share among a reduced number of individuals seeking mortgages.”
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Ashley Thomas, director at Magni Finance, acknowledged the positive news but emphasized the persisting volatility of the mortgage market. Thomas remarked, “Although this development is promising, the mortgage market remains characteristically unstable and unpredictable. The decrease in inflation was anticipated, and I anticipate more lenders will seek to lower their rates after having raised them considerably over the past couple of months. What we might be observing is a response to an overly reactive stance.”
Despite the Bank of England’s 14th consecutive increase in the Base Rate to 5.25 percent on August 3, fixed mortgage interest rates are continuing to trend downward. Recent data from Rightmove indicates that the average five-year fixed mortgage rate has declined from 6.08 percent to 5.81 percent in just three weeks.
However, Samuel Mather-Holgate, an independent financial advisor at Mather and Murray Financial, cautioned that the series of interest rate reductions may not be a sustained trend. Mather-Holgate warned, “Lenders are currently aiming to attract new borrowers by reducing rates, but this situation is unlikely to endure. Although new lending has nearly stalled, lenders are willing to engage borrowers with slim profit margins in their pricing. Nevertheless, with persistently high inflation and a central bank more inclined to raise rates than lower them, the trend of rate cuts may soon come to a halt. Borrowers are facing uncertainty about the direction of borrowing costs until the Bank of England eventually initiates rate reductions, which is anticipated to happen later this year.”
Darryl Dhoffer at The Mortgage Expert echoed similar sentiments, advising borrowers to take advantage of the current favorable conditions. Dhoffer remarked, “Capitalizing on the present circumstances is prudent, as conditions could markedly differ in the upcoming month.”
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