Inflation is down by 2.8 per cent
Santander cuts mortgage rates by up to 0.23% from TOMORROW(Image: PA)
Santander has announced it will cut mortgage rates by up to 0.23 per cent.
On Friday May 22, Santander is reducing selected residential and buy-to-let rates.
Its first-time buyer 85 per cent, 90 per cent and 95 per cent Loan to Value (LTV) fixed rates are reducing by up to 0.23 per cent while its product transfer buy-to-let 60 per cent and 75 per cent LTV 2- and 5-year fixed rates are reducing by up to 0.10 per cent.
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Data yesterday showed inflation was down more than expected to 2.8% per cent in the year to April from 3.3 per cent in the year to March.
Speaking to Newspage, Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, said borrowers shouldn’t expect rates to keep coming down.
He added: “A big lender cutting rates is great news but there’s a risk some borrowers will believe rates will continue to edge down, especially given that Wednesday’s inflation data fell more sharply than expected.
“The inflation data is a wolf in sheep’s clothing for borrowers, as it masks the full impact of the fuel crisis caused by events in the Middle East and the fact that inflation could rise sharply over the summer. That could send rates higher rather than lower.”
Martin Rayner, Mortgage broker and financial adviser at Compton Financial Services, added: “Swap rates may be moving around a lot, but lenders do not price mortgages on swaps alone. Business levels matter just as much.
“If a lender needs applications, rates come down. If they become too busy, rates can rise quickly to slow demand and protect turnaround times. Markets are extremely sensitive at the moment.
“Political uncertainty, global tensions and UK economic data are all creating volatility, which makes predicting the next movement in swap rates very difficult. That does still increase the chances of more lenders adjusting rates over the coming weeks.
“If you are remortgaging, secure a deal as early as possible, ideally up to six months before your current rate ends. You can normally switch to a lower rate later if the market improves further. Secure the safety net first. Then benefit from any reductions afterwards.”
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