Derin Clark

Derin Clark

Online Reporter
Published: 22/10/2019

Santander has ramped up the competition within the mortgage market by launching its lowest ever five-year mortgage deal.

Its five-year fixed rate deal at 60% loan-to-value (LTV) is available at 1.49%, the lowest five-year rate Santander has ever launched and the lowest rate currently available in this chart, on a deal that can be applied for directly by borrowers. This deal overtakes the previous chart-topping rate of 1.53% available from Skipton Building Society. Launching such a competitive five-year deal, which is available to those purchasing a house or remortgaging, is good news for borrowers who want the security of locking their mortgage rate into a long-term deal during this time of economic uncertainty.  

Santander has also launched a two-year fixed rate deal, offering 1.21% at 60% LTV. This deal is the joint-lowest rate on a mortgage that can be applied for directly by borrowers in our two-year remortgage chart, equalling the rate offered by Barclays Mortgage.

At the same time, Santander has launched an additional 10-year mortgage offering a fixed rate deal of 2.34% at 75% LTV. Earlier this year, we reported that competition within the 10-year fixed rate mortgages was at its highest level in over decade, with 157 10-year fixed rate deals available in August 2019 compared to just 22 in August 2014. The increase in 10-year mortgage products suggests that mortgage lenders believe the demand for 10-year fixed rate mortgages is on the rise.

Mortgage competition

Santander is currently the third largest mortgage provider in the UK, sitting behind Lloyds Banking Group and Nationwide Building Society. This means that the launch of these deals from Santander could influence other brands to follow their lead, which could result in increased competition, especially within the lower 60% and 70% LTV tiers, at a time when mortgage rates are already falling. While this is good news for mortgage borrowers, it could result in less competitive lenders being squeezed out of the market.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said: “This latest move by Santander just goes to show that the mortgage rate war isn’t over. As one of the biggest mortgage brands in the country, these latest market-leading direct deals will not only appeal to new borrowers, but also those looking to remortgage, who are maybe weighing up their options.”

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