These are the first price cuts from mortgage lenders following weeks of hikes, which have seen average rates soar by over 1%.
Indeed, the typical interest on a two-year fixed rate is currently 5.89% according to Moneyfactscompare.co.uk, versus 4.83% at the end of February.
Lenders have been increasing fixed rates in response to the war in Iran and have also pulled many of their lowest-priced deals with sub-4% mortgages now non-existent.
So, the news two major lenders are adjusting rates downwards has come as welcome to news to both brokers and borrowers.
Santander said it would be lowering prices on higher loan-to-value (LTV) mortgages products including all 85% to 95% LTV two-year fixed, first-time buyer products by up to 0.28% from Thursday (16 April). It will also be cutting many other residential rates.
Then TSB announced cuts to its two-year fixed rates by up to 0.45% – however this came as it also announced some products would rise in price.
These cuts come just after a two-week ceasefire was announced between Iran and the US.
Nicholas Mendes, mortgage technical manager at John Charcol, said this pause has given lenders time to consider pricing whilst Swap rates are falling.
“After what has been a very turbulent few weeks, this is probably the first point where the market feels a little more settled,” he explained.
“It gives lenders a chance to make pricing moves without the same immediate fear that sudden market swings will knock funding costs or service levels back off course.
“Santander moved yesterday, and TSB is now among the first of the main high street lenders to follow. Other lenders have also made reductions over the last couple of days, which shows there is appetite to stay competitive as others prepare to make similar changes.”
Borrowers urged to seek advice
He warned there is a caveat to this – it’s not a ‘full market turn’. As mentioned, TSB is also increasing some rates and Santander’s cuts were focused mainly on mortgages for house purchases and product transfers – which is where current customers looking to remortgage switch to a new deal with the same lender.
Mendes added: “For remortgage borrowers, and especially anyone coming off a fixed rate in the next three to six months, this is not the point to sit back and wait.
“The sensible approach is still to secure a rate early, then keep it under review. That gives protection if markets turn again, while still leaving room to switch if pricing improves further before the new deal completes.
“That matters just as much for borrowers weighing up a product transfer against a full remortgage. In a market like this, the cheapest option today may not still be the cheapest option in a few weeks’ time, so keeping that choice open matters.”