Santander has joined other banks and building societies in cutting the cost of home loans.
Industry experts say this latest move has the potential to ramp up a rates battle between Britain’s biggest lenders.
Recent reductions by a number of lenders mean young adults buying a first home will be around £100 a month better off.
At the same time, some lenders have increased the size of loans they will allow on a property which means people do not need such a large deposit.
Halifax, NatWest, Barclays and HSBC have recently announced small rate reductions on new home loans and now Santander is cutting selected residential fixed rates by up to 0.16 percent for purchases.
Stephen Perkins, Managing Director at Yellow Brick Mortgages, told Newspage: “This is Santander reacting to its competitors and joining the rate reduction party.
“The lender follows Halifax and NatWest who reduced their rates on Monday. This move from Santander has the potential to ramp up the rate battle between the UK’s biggest lenders.
“Things are really hotting up now in the mortgage market.”
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, said: “These cuts aren’t breathtaking but the cumulative effect of lenders competing for market share is starting to show.”
Andrew Montlake, Managing Director at Coreco, said: “Whatever happens in the General Election this week, borrowers look set to have more power in the months ahead.”
The reductions will offer some hope to the hundreds of thousands of people coming off cheap fixed rate over the next 12 months.
However, they still facing paying substantially more – hundreds of pounds more each month – given that industry experts saying there is no chance of a return to the ultra low home loan rates of 2 percent.
Simon Bridgland, Broker/Director at Release Freedom, was unimpressed by the small cuts from Santander, which are only available on new purchases, describing them as “abysmal”.
“Any poor soul wanting a remortgage or existing Santander borrowers in need of a new deal will just have to stay on the higher existing rates,” he said.
Justin Moy, Managing Director at EHF Mortgages, said: “This is another small but important rate cut from Santander.
“While buyers won’t see a huge improvement in their monthly payments, all these little wins are adding up over time. The mortgage rate cut momentum is growing.”
Hannah Bashford, Director at Model Financial Solutions, was more optimistic saying: “Put your summer plans on hold, a rate war seems imminent.
“The lead-up to the election is bringing a wave of optimism and potentially marks the beginning of good news for the mortgage market, with the prospect of rate reductions throughout the summer.”
