Santander has reintroduced a 3.99 per cent five-year fixed rate mortgage to the market, joining a small group of lenders who dropped interest rates below 4 per cent earlier this month.
In an update to brokers today (February 21), the lender said it was introducing rate reductions across a number of products, including a 0.50 percentage point reduction on its 95 per cent loan-to-value five year fixed rate for first-time buyers, which now sits at 5.14 per cent.
Santander is now just one of 12 lenders offering a five-year fixed rate below 4 per cent, according to Moneyfacts.
Earlier this month, HSBC was one of the first high street lenders to launch a sub-4 per cent fixed rate deal on a five year mortgage since October when more than a thousand products were pulled from the market in the wake of the "mini" Budget.
Interest rates shot up on mortgage products in the weeks following Liz Truss’s uncosted "mini" Budget in September, peaking at more than 6.5 per cent before tracking back down.
Despite the Bank of England’s continued efforts to tame inflation by hiking the base interest rate - which now sits at 4 per cent - some brokers predicted back in January that mortgage rates below 4 per cent would not be here until March at the earliest.
Earlier this week, First Direct also reintroduced a sub-4 per cent five-year fixed rate of 3.99 per cent on a 60 per cent loan-to-value mortgage.
Commenting on the deal, Moneyfacts’ finance expert, Eleanor Williams said the appeal of the deal is boosted by the fact there is a relatively low £490 arrangement fee.
“There is also an incentive package including a free valuation for all, while those remortgaging may also be able to benefit from free legal fees,” Williams said.
Mixed picture
Elsewhere in the sector, not all lenders have been able to maintain their rate cuts.
Yesterday, Virgin informed intermediaries that it was increasing the interest rate charged on a number of its remortgage products.
The increases ranged from 0.04 percentage points on its 65 per cent loan-to-value five-year fixed rate, bringing it up to 3.99 per cent, to 0.25percentage points on one of its three-year fixed products.
jane.matthews@ft.com
