Santander Surprises Market with Mortgage Rate Rise

by | Tuesday 23rd Jan 2024 | Mortgage News

In an honestly surprising move, Santander announced today that they would be raising selected standard residential fixed rates for both purchase and remortgage clients. This decision comes at a time when most lenders in the UK are actively reducing their mortgage interest rates to attract homebuyers and stimulate the housing market. Why the mortgage rate rise, and why the sudden change of heart with one of the biggest UK mortgage lenders?

Mortgage Rate Rise From Santander

In a communication sent to mortgage brokers today, Santander revealed that the changes would be effective immediately. Selected standard residential fixed rates are set to increase by a margin ranging from 0.05% to 0.20% for both purchase and remortgage clients. Additionally, the bank is withdrawing all residential First Time Buyer exclusive fixed rates that come with £500 cashback. Furthermore, a 90% Loan-to-Value (LTV) 3-year fixed rate for purchase clients, previously offered at 5.18% with no product fee, is also being taken off the market.

This move by Santander is notable as it bucks the prevailing trend in the mortgage market. Many lenders across the UK have been actively reducing mortgage interest rates in response to favourable economic conditions, lower inflation, and increased competition in the industry. Industry experts had anticipated further decreases in rates throughout the year, making Santander’s decision to raise rates particularly unexpected.

The bank assured mortgage brokers that there would be no changes to new business large loan exclusives, tracker and Buy to Let rates, or the product transfer range. This decision appears to be a targeted adjustment, primarily affecting standard residential fixed rates for purchase and remortgage clients.

The Overall Mortgage Market In 2024

As of 2024, the overall mortgage market in the UK has been witnessing a trend of decreasing interest rates. This has been attributed to a combination of factors, including the Bank of England’s efforts to support economic recovery through accommodative monetary policy and increased competition among lenders. Many borrowers have taken advantage of historically low rates to enter the property market or refinance existing mortgages.

The unexpected move by Santander raises questions about the bank’s internal considerations and market outlook. It may signal a strategic shift or response to specific challenges faced by the bank in the mortgage lending sector. Customers and industry analysts will be closely monitoring how this decision plays out and whether other lenders might follow suit in the coming months.

Potential homebuyers and existing Santander mortgage customers are advised to review their financial plans and consider consulting mortgage brokers for guidance in light of these changes. While the specific impact on individual borrowers will vary, it underscores the importance of staying informed about market dynamics and being prepared for fluctuations in mortgage rates, even during times of general rate reduction across the industry.

Speak To a Mortgage Advisor in 2024

As the mortgage market continues to evolve, the unexpected move by Santander serves as a reminder that predicting the trajectory of interest rates and economic conditions remains a complex task, requiring vigilance and adaptability from both lenders and borrowers alike. If you or anyone you know is concerned about rising mortgage interest rates, or just wants to talk things through with a specialist before making any decisions, we are here to help. Please feel free to give us a call or send us a message to book in a fee free initial mortgage consultation.

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