After over six months of non-stop reductions on mortgage rates, Santander bucked the trend by increasing prices on its fixed rate products.
The provider is withdrawing all residential first-time buyer exclusive rates with £500 cashback, as well as its 90% loan to value (LTV), three-year fix for purchase customers.
From 24 January, some standard residential fixed rates will shoot up between 0.05% and 0.20% for purchase and remortgage customers.
The price increase could mark the end of the mortgage wars, which YourMoney.com has covered since rates plummeted in August 2023.
However, on the other side of the fence, Barclays continued to drive down rates on a range of products from its residential purchase-only range. The lender slashed prices by 0.41% with a mortgage guarantee fee-free five-year fix now priced at 5.86%.
In terms of options for homeowners hoping to remortgage, the two-year fix up to 60% LTV has plummeted by 0.46% to now stand at 4.34%. This deal comes with a £1,999 fee for customers to pay.
The change in approach from Santander may have gone against the grain, but not everyone in the mortgage sector was shocked.
Nicholas Mendes, a mortgage expert from Jon Charcol, said: “This latest repricing from Santander had been expected due to the increase in swaps from when these original deals were priced. It’s only a surprise that it’s taken this long. I expect we will see a few lenders among the best to make slight adjustments, though this isn’t a long-term trend as rates are expected to decrease over the year.
Santander outnumbered in latest round of mortgage rate reductions
Nationwide Building Society joined Barclays in the cutting exercise by lowering rates by up to 0.81%. From 24 January, a batch of new tracker rate products that come with a £1,499 fee will also be available.
Rates from the mutual will begin at 3.84% on selected two, three, five and ten-year switcher rates at 95% LTV. Prices have not been that low since May 2023.
Mendes said: “Nationwide’s latest reprice goes against expectations and market trend in recent days, with a range of rate reductions and a new headline 3.84% for existing clients looking for additional borrowing.
“Nationwide has also added a range of new products which is particularly attractive for first-time buyers and home movers. We’re starting to see certain lenders moving away from the pack now as lenders assess their risk appetite.”
Lenders are assessing ‘their risk appetite’
Elsewhere, Virgin Money opted to reduce rates up to 0.65% for deals in its remortgage exclusives, purchase and buy-to-let exclusive ranges.
Fixed-rate mortgages will be slashed as of 24 January), with a two (4.64%) and five-year deal (4.34%) going down by 0.65% and 0.3% respectively.
‘Rate war drum broken’ in ‘Hokey Cokey’ dance among lenders
In comments on NewsPage, Ken James, director at Contractor Mortgage Services, says “the rate war drum may be broken, or at least temporarily out of order.”
He added: “The fact that swap rates have been wobbling is a clear indicator that the tide may have changed, even if it’s a temporary shift we need to stay realistic and keep the wheels on the bus.
“Deals will always rise and fall but with the level of rates having been high for some time the downward momentum has created a sense of positivity that has been missing. Now with even a small rise will this positivity start to drop off?”
Stephen Perkins, managing director, at Yellow Brick Mortgages, said: “Many lenders are taking part in a rates ‘hokey cokey’ dance at the moment. Announcing rate reductions, getting an influx of applications and then increasing their rates to slip back into the pack.”
