Santander hikes rates by a further 0.3%

Santander has now delivered a hat-trick of hikes in about 10 days, and that will leave many borrowers wondering what on earth is going on. The concern is not just the direction of travel, but the speed of it. Ongoing conflict in Iran is unsettling markets and putting fresh pressure on mortgage pricing, and borrowers are once again paying the price for that instability. For context, a 0.9% increase on a £250,000 repayment mortgage over 25 years would add roughly £127 a month. If markets keep wobbling, I would not be surprised to see more lenders reprice upwards. This is exactly the sort of backdrop that destroys confidence and forces buyers to make big decisions in a market that keeps moving under their feet.

Three rate hikes from Santander in ten days is a signal of a market in distress. Swap rates have moved fast and lenders are repricing just to keep up. The problem is that borrowers don't move fast. We have clients mid-application right now who are facing a materially different deal to the one they budgeted for just a fortnight ago.

The sub-4% era is over for now, and the honest advice to anyone sitting on the fence is simple: the best rate available today will almost certainly be better than the best rate available next week. Lock in now, review later.

Santander are saying they don't want new business right now, although their product transfer rates for existing clients don't appear to have had such a hefty hike.

Santander only increased its rates on Tuesday by up to 0.35% so to see further chunky increases from the same lender tells you all you need to know about where mortgage rates are headed. And that, based on this evidence, is up. Aspiring buyers and those due to remortgage in the next six months or so need to lock into a rate as soon as possible, as right lenders have got the heebie-jeebies and are hiking fast.

More mortgage mayhem with Santander increasing by a not insignificant amount, following on from a raft of other lenders in recent weeks, some who have changed their product ranges multiple times in only a short space of time. We hope the large jump is to prevent more regular and urgent rate changes. Get your rates locked in now if you are in the mortgage process. If rates come back down between now and when your new deal starts or you complete, your mortgage broker should be able to secure the lower rate. Locking in now prevents it going higher.

A lender like Santander increasing its rates twice in a week sends an ominous message to borrowers. The war in the Middle East has seen a dramatic U-turn in the direction of rates in a matter of weeks. It feels like things are now starting to get serious.

Inevitable that Santander joins the rest of the High Street lenders in their frequent rate increases over the last week or so, as the Middle East conflict reverses all the good progress made over the last 6 months, in just 3 weeks. With fixed rates taking a bashing, the popularity of tracker and discount mortgage deals comes more into play as brokers look for value across the market. Borrowers need to consider these alternative options carefully.

Santander’s latest rates only went live yesterday, and they are already being pulled (tomorrow evening). In this latest set of changes even the tracker rates are going up by 0.35% which is quite an unusual move. Banks and building societies have been receiving a huge number of applications as brokers rush to secure their clients the cheap deals before they go up, which means their service standards are slipping. Santander’s two-year fixes will have gone up by 0.65% in just a few days.

Rates are still not that expensive even with all of these price hikes, but they could keep rising. The mortgage acceptance criteria is still the same, so there is still income stretch mortgages available, and the lenders are still keen to attract borrowers. We are still urging our clients to act with more urgency so we can get them decent rates while they are available.