Major lenders cut mortgage rates – but Santander will pull its 3.99% five-year fix soon

Two major mortgage lenders have today announced they are cutting rates in a boost for borrowers.

From tomorrow, Nationwide Building Society and banking rival Halifax will cut some fixed rate deals that could benefit first-time buyers, home movers and those remortgaging.

However, while these two lenders are cutting rates, another is pulling one. Santander is removing its headline grabbing 3.99 per cent five-year fix at 10pm tomorrow due to high demand.

Aaron Strutt, of mortgage broker Trinity Financial, said: ‘Santander has been receiving a huge amount of applications for its sub-4 per cent rates and given the rise in funding costs over the last couple of days, it was only a matter of time until the bank was going to withdraw some of its products. 

‘Santander is keeping its 3.99 per cent two-year fix and Barclays still has the 3.99 per cent five-year rate although they may not be around much longer. 

‘There is still time to secure Santander’s best buy deal but borrowers will need to be quick.’

Big hitters: Halifax and Nationwide’s rate cuts should benefit a number of first-time buyers, home movers and households looking to remortgage 

Santander is not the only mortgage lender withdrawing rates tomorrow. The Co-operative Bank has also announced it will temporarily withdraw some of its fixed rates from close of play tomorrow.

Nationwide is lowering rates on a number of its deals by up to 0.33 percentage points.

Its changes will benefit both first-time buyers and home movers, but not households remortgaging.

Nationwide’s lowest five-year fix will fall to 4.09 per cent for those buying with at least a 40 per cent deposit. The product comes with a £1,499 fee.

On a £200,000 mortgage being repaid over 25 years that would equate to paying £1,066 a month. 

Other notable rate changes include a market leading two-year fix for home movers buying with at least a 25 per cent deposit.

The two-year fix charges 4.24 per cent but comes with a £1,499 fee, meaning there may be cheaper products overall, such as Yorkshire Building Society’s 4.27 per cent rate, which comes with a £995 fee.

First-time buyers may well be eyeing up Nationwide’s two-year fix for those buying with a 20 per cent deposit. The rate is being reduced by 0.33 percentage points and from tomorrow will charge 4.5 per cent with a £999 fee. 

Halifax has also announced it will be cutting rates on some deals from tomorrow.

Home mover and first-time buyer mortgage products will be cut by up to 0.2 percentage points by Halifax, while remortgage rates will fall by up to 0.15 percentage points. 

Meanwhile, Barclays has managed to find room for improvement in its existing customer products.

David Hollingworth, associate director at L&C Mortgages says that news of inflation unexpectedly jumping to 3 per cent in January means that some of the lowest fixed mortgage rates on the market could be under threat.

The jump in inflation has led analysts to speculate that the Bank of England won’t cut interest rates next month when they next convene for an MPC meeting.

‘The movement in swap rates, which are a key indicator for fixed mortgage rates has not been enormous, so it does look to be enough to put some of the very lowest rates in peril. 

‘It’s not a need for panic but borrowers that have been considering a new deal may want to reach a decision sooner rather than later in case of more movement in rates.

‘The constant shift in mortgage rates can be frustrating but the good news is that the longer-term expectation for Bank of England base rate is that it will continue downwards as the year progresses. 

‘What we don’t know is when it will next fall and how far.’