Copy article

"It's like watching dominoes fall" as Santander enters rate fray

Journalist: Justin Moy, Contributing Editor

ended 11. August 2023

From Monday 14th August, Santander has announced it is reducing a number of its fixed rate deals by up to 0.29%. It follows a number of High Street lenders reducing their rates over the past week.

Peter Stamford, director of Alston-based Moor Mortgages, welcomed the news, but cautioned that a lot will depend on what happens with the labour market and inflation data next week:

“Santander is the latest lender to enter the price fray. Borrowers and brokers alike will certainly welcome them aboard. If a couple more large lenders jump in, too, we might toast the UK mortgage market's brightest week for quite some time. All eyes are on next week's jobs data and inflation numbers. Next week is going to be a big one for borrowers.”

Justin Moy, founder at Chelmsford-based mortgage broker, EHF Mortgages, was also upbeat and noted the timing of the announcement, coming after Friday morning's GDP data:

“It's great to see more rate reductions from one of the High Street mortgage lenders. With the positive GDP figures today, along with inflation figures due shortly, it's certainly a brave move by Santander. The fact this move came after the GDP data published early on Friday may suggest Santander thinks we're at, or at least near, the peak of interest rates.”

Meanwhile, Gary Boakes, director of Salisbury-based mortgage broker, Verve Financial, said: "It's like watching dominoes fall: when one goes, they all start to fall. With HSBC, Halifax, NatWest and Santander now making reductions this week, it really is a case of who's next. The recent positive news on core inflation and only a 0.25% base rate increase is making the market reassess after the big rate rises in June."

Publishers: additional comments below. If you use any, or all, of the content in this News Alert for publication, please credit Newspage® and link to https://newspage.media 

11 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Justin Moy
Managing Director at EHF Mortgages
It's great to see more rate reductions from one of the High Street mortgage lenders. With the positive GDP figures today, along with inflation figures due shortly, it's certainly a brave move by Santander. The fact this move came after the GDP data published early on Friday may suggest Santander thinks we're at, or at least near, the peak of interest rates. Whether the cuts we've had over the past week or so are just a blip or the beginning of a long-term trend remains to be seen. This will be helpful for more borrowers and will hopefully see competition among lenders continue as they strive to gain some market share.
Copy

Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
In what appears to be a harmonious symphony, major lenders including Santander, Halifax, NatWest, HSBC, First Direct and TSB are orchestrating a reduction in fixed mortgage rates. This will no doubt improve affordability for aspiring homeowners, which is great to see. With these imminent rate cuts, the British housing market is poised for another exciting time over the next 6-12 months. The allure of lower borrowing costs is expected to encourage potential buyers, both homeowners and landlords alike. Mortgage rates across these major lenders are falling by nearly 70 basis points, making property ownership that much more accessible to a broader demographic. We remain cautiously optimistic, hoping that this trend marks the start of a period of favourable mortgage rates. However, while the market takes a sigh of relief, all eyes are now on next week's inflation data and how the Bank of England responds to that.
Star Quote
Copy

Gary Boakes
Director at Verve Financial
It's like watching dominoes fall: when one goes, they all start to fall. With HSBC, Halifax, NatWest and Santander now making reductions this week, it really is a case of who's next. The recent positive news on core inflation and only a 0.25% base rate increase is making the market reassess after the big rate rises in June.
Star Quote
Copy

Peter Stamford
Mortgage Expert at Stamford Home Finance
Santander is the latest lender to enter the price fray. Borrowers and brokers alike will certainly welcome them aboard. If a couple more large lenders jump in, too, we might toast the UK mortgage market's brightest week for quite some time. All eyes are on next week's jobs data and inflation numbers. Next week is going to be a big one for borrowers.
Copy

Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
Santander steps into the price tussle and we welcome them with open arms. With today's GDP results beating predictions, we hope the market doesn't view it as a green light for the Bank of England to keep a hawkish stance. Next week's jobs and inflation data will be key. If Barclays join the price war party, we could be celebrating the UK mortgage market's most positive week in a long while.
Copy

Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
This is more good news, which will come as a great relief to many homeowners. Let’s just hope the price war continues, making mortgages more affordable and getting the property market back on track. There may just be life in the mortgage and property market yet.
Copy

Editor
Michelle Lawson
Director at Lawson Financial
This now seems to be the norm at last and hopefully the tide is turning to give borrowers some relief. Although we are nowhere near where rates once were, the fact they are coming down is a step in the right direction and shows there is more stability and certainty than there was. Unemployment and inflation figures are out next week so I am guessing these will also be heading in the right direction to echo the confidence the lenders appear to now have.
Copy

Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
Always encouraging when lenders' rates reduce, but for how long? GDP figures recently announced show small growth - possibly reducing any ideas on recession, however, Bank Of England I'm sure would have preferred flatline figures if they are to even consider pulling the handbrake. Slowing down the market, and stopping people from spending is key to dropping inflation. 16th August next inflation figures will give us some key indicators as to what will pan out over the next few months and into 2024. My opinion on this, until we sell regular falls in inflation on a monthly basis, will we then see the MPC "breaking the glass" and "pulling the emergency stop" on base rates.
Copy

Joe Stallard
Director and Advisor at House and Holiday Home Mortgages
It's super to see Santander, another high-street lender, sharpening their pricing. A slow couple of months for mortgages will be driving this competition and let's hope it continues for the sake of borrowers, although I'm still not yet expecting wide-scale, large reductions. Who knows what's to come though? It's rare to be surprised in the mortgage industry any more.
Copy

Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
Another day, another big-name lender comes to the rate reduction party and with the all-important swap rates now roughly 0.5% lower than they were 4 weeks ago, hopefully this is another indication that the top of the rate wave has crested. Of course, next week's inflation data could provide a sharp rock on which the wave may crash but with expectations that the positive outlook on that front is set to continue, the last quarter of 2023 should see a return to the lower rates that were prevalent pre-summer. The knock-on effect on the housing market if this trend sustains will see a sharp pin in the bubble of those forecasting a price crash and as a clear anecdotal measure of this, purchase enquiries in Scotland this week have very definitely been reignited and a positive bout of post-summer holiday buyer activity seems more likely now to brighten up the winter months ahead.
Copy

Ben Tadd
Director at Lucra Mortgages
It was inevitable that off the back of this week's latest round of rate reductions, Santander would also join the party. The rate war seems to be in full flow now with the majority of the major lenders having cut their rates this week to compete for market share. The smaller lenders will now be forced to follow suit and the domino effect will more than likely continue across the market into next week, with further rate reductions forecast from the rest of the field. This is a trajectory that will continue I expect, unless the inflation numbersdue out on the 16th of August take an unexpected turn for the worse.