Santander has become the latest high street lender to reduce the rates of its mortgage deals, following a stream of other cuts by fellow banks last week, in a signal of hope for prospective buyers.
On Monday, the bank cut its selected residential purchase and remortgage fixed rates by between 0.05 per cent and 0.29 per cent.
Now, a 85 per cent LTV – the ratio of what you borrow as a mortgage against how much you pay as a deposit – with a £999 product fee is now priced at 6.09 per cent, down from 6.27 per cent.
Rival Barclays also announced a number of cuts, reducing a two year 85 per cent LTV with zero pound product fee is now priced at 6.96 per cent to 6.66 per cent.
The bank was the last of the UK’s major high street bank to cut the rate of its deals, with HSBC, Halifax and Nationwide slashing their rates last week.
Nationwide slashed the price of its fixed rate mortgage deal by 0.55 percentage points. TSB also revealed reductions of 0.4 points on some of its deals.
Over the summer, the housing market was gravely impacted by the Bank of England’s decision to hike interest rates for the fourteenth consecutive time in a row.
The move sent mortgage lenders into a frenzy, with rates reaching their highest levels in 15 years.
However, reports of a cool down in inflation have seemed to dampen concerns in the market.
July’s inflation figures published this Wednesday will likely lead to further rate reductions. Markets expect the headline rate of inflation to fall to 6.7 per cent, down from 7.9 per cent last month.
Rob Gill, managing director at mortgage broker Altura Mortgage Finance, told City A.M. last week that if this week’s data on inflation confirms a further fall then there could be a “mortgage price war in September”.
“Who saw this coming? It looks more and more like the bigger lenders are fighting for market position, a sure sign that they are well off their respective lending targets,” Ranald Mitchell, director at Charwin Private Clients, said.
“The question is, with the likelihood of further base rate increases, is this a short-term window of opportunity for expiring fixed rates to soften the payment shock they have steaming towards them?”