Brokers say Santander rate cuts suggest lenders believe we "may be edging closer to a rate cut by the Bank of England"

Santander has announced that, from Monday, it will be reducing selected residential remortgage 2 and 5-year fixed rates in a move that one broker suggests lenders increasingly believe a Bank of England rate cut is on the cards.

Santander's lowest remortgage rate will be a 60% LTV 2 year fixed rate at 3.84% with a £999 fee. The lender is also reducing residential product transfer fixed rates.

On residential remortgage new business, all 60-75% LTV 2-year fixed rates are reducing by up to 0.16%. All 60-75% LTV 5-year fixed rates reducing by up to 0.10%. 

On residential product transfers, all 60-75% LTV 2-year fixed rates are reducing by up to 0.13%. All 60-75% LTV 5-year fixed rates are reducing by up to 0.10%.

Ken James, Director at Contractor Mortgage Services, said Santander is likely looking to hoover up a lot of remortgage business in the months ahead: “This is a calculated move by Santander. The reductions, although modest, are strategically timed. They're likely aimed at capturing a larger slice of the remortgage market, especially as a wave of fixed-rate deals come up for renewal this summer.

"This decision reflects growing confidence among lenders that the interest rate peak has passed and that we may be edging closer to a rate cut by the Bank of England, possibly as early as August. After 14 consecutive hikes between 2021 and 2023, the market is now eyeing a gradual softening of rates, assuming inflation continues to ease and wage growth remains in check.”

Meanwhile, Mike Staton, Director at Staton Mortgages, said Santander are back in the mix: “Santander have made it clear this year that they want to get back into the mortgage market and compete with the big boys. They appeared to be in hiding post-Covid, didn't really offer any niches and were just another lender you would resort to if a lender with a great deal declined your applicant. Now they want to be back in the mix and are throwing around some market-leading deals. This is also showing their confidence in future Bank of England rate reductions, as we all await with bated breath to see if the Bank of England and the Labour government remove the boot they have the UK public pinned to the floor with."

Elliott Culley, Director at Switch Mortgage Finance, said: “In the current market, Santander has chosen to concentrate its effort on improving their remortgage package for higher deposit holders. 2025 is a big year for remortgages so it's not suprising to see Santander focusing its attention on this part of the market, while there is still some uncertainty in the market.”

Daniel Hobbs, CEO at New Leaf Distribution, also welcomed the news: “Good news for borrowers from Santander. The hope is that other lenders follow suit in the days ahead and competition increases. The market desperately needs an injection of life."