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Big cuts announced for Santander and Barclays mortgage rates

Barclays and Santander have cut their rates by up to 0.5%, so what does this mean for you and your mortgage in 2024?

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 10 January 2024

6 min read

Cuts announced for Santander and Barclays mortgage rates

In the initial weeks of January, UK mortgage providers have engaged in fierce competition, racing to offer the most competitive mortgage rates as we enter 2024. Leading UK lenders Barclays and Santander have now announced cuts of up to 0.5% for their customers as of Wednesday 10th January.

This follows cuts from HSBC and Halifax announced at the start of January, with further announcements being released since by other lenders like Co-operative Bank. I’m sure that similar cuts and new product launches from other lenders are likely to continue throughout early 2024 based on the direction the market is currently going in.

There have been definite challenges faced by lenders, homeowners and those managing mortgage repayments over the last few years, following the impact of Covid-19, Brexit and high levels of UK inflation. It’s encouraging to see big lenders like Barclays and Santander lowering their rates and ideally more lenders will continue moving in this direction.

With around 1.6million people coming off low fixed rates this year, it could be a good idea to lock in a low rate while this option is available. While we’re optimistic that this downward trend for mortgage rates will continue throughout 2024, there are no guarantees.

QUICK SUMMARY – Big cuts announced for Santander and Barclays mortgage rates

In early January, many UK mortgage providers including Barclays and Santander cut rates up to 0.5%, addressing challenges from Covid-19, Brexit, and high inflation. This is a great move forward for the UK mortgage market this year and hopefully low rates continue to be announced over the coming months.

  • Barclays and Santander are cutting mortgage rates by up to 0.5%, providing new options for remortgaging or purchasing homes. This includes a new 2-year fixed rate mortgage from Barclays at 4.17% for new buyers.
  • Lenders are fighting to offer the lowest rates to appeal to new customers and ease the transition for people coming off very low fixed rates this year.
  • While jumping into a new low fixed rate deal can be tempting, it’s best to carefully consider any attached fees or costs before you make any decisions. You should speak to an experienced mortgage broker if you aren’t sure what to do or what your best options are.

Barclays and Santander mortgage rates are set to drop today and by a significant amount (up to 0.5%). This won’t affect anyone with a current mortgage but does open up options significantly for those looking to remortgage or buy a new home.

Alongside cutting current available rates, Barclays have also announced a new 2 year fixed rate mortgage is being launched with an interest rate of 4.17% (previously would have been 4.62%)*. This is only available for new buyers and provides some hope to first time buyers who may have worried about being stuck with high rates after last year’s rate increases.

Following a few years of mortgage stress for households across the UK, it’s positive to see more low fixed rate mortgages becoming available. This is especially true as many have struggled with the impact of high variable rates, and it has been increasingly difficult for new buyers to get onto the property ladder in the first place.

Note: This rate will only be available for applicants who want to borrow a maximum of 60% of the property value (60% loan to value or LTV). There are also attached product fees of £899 that you should be aware of, so you’ll need to budget for this if you want to apply or make a switch.

What’s the catch?

Currently most available rates on the market tend to be better for people looking to remortgage compared to those who are buying for the first time. This indicates what lenders are prioritising at the moment, but it doesn’t mean that the rates are far worse for first time buyers.

The main aim of these low remortgage rates is to ease the pressure on people coming off very low fixed rates this year, so they aren’t stuck with significantly higher repayments. This would mean needing to remortgage though as UK variable interest rates are still much higher (anywhere between 5% – 9% depending on the lender).

Barclays new 2 year fixed rate option at least offers a decent rate for first time buyers, even if it is over 4% compared to some of the sub 4% options available for remortgages.

Is it worth switching to a new lender?

It’s hard to say if making a switch would be worth it for you, as everyone’s situation will be different. If you’re struggling with your current repayments, you can always check what rates other lenders are offering to see how your lender measures up.

There can be fees attached to changing your mortgage or leaving your lender early though, which many people don’t realise. You should check your mortgage documents to see if this is the case or contact your lender or an independent broker for advice if you aren’t sure.

It’s possible that your current lender may even be able to offer better rates for you now, so it’s worth checking periodically to see if you can save. Switching your mortgage with the same lender is known as a ‘product transfer’ and can often be simpler and involve less paperwork compared to moving to a brand new one.

Barclays, Santander and many other UK lenders have cut their rates this month to try and appeal to new customers after a very turbulent year last year in the UK mortgage market.

We’re happy to see lenders responding to the lower inflation rates and steady Bank of England rates to offer more affordable mortgage options. Many people in the UK have been unfairly pushed into financial difficulty or debt over the last couple of years due to steadily increasing rates.

It’s important to think carefully before choosing a mortgage lender and it can be helpful to do some research, so you know exactly what you’re getting into. I’d suggest looking at things like:

  • Online customer review scores
  • Current interest rates
  • Specific mortgage features
  • Any extra benefits offered by the lender
  • If they are the best lender for the type of mortgage needed

Barclays and Santander are both popular options for UK mortgages, with both being major high street banks. Either one could be a good option depending on your own situation and the type of mortgage you need. Alternatively, there are many other lenders available on the market and one of those could be right for you instead.

The best approach would be to check what rates are being offered and then look at specific features of the mortgage to work out what is affordable and suitable for you. You could use a price comparison site like MoneySupermarket or Compare the Market to give you a quick indication of potential rates, but they’re unlikely to give a full and detailed explanation of each mortgage.

It’s hard to give an exact forecast this far ahead of time, as many things will affect if UK interest rates rise or fall. Some of the main factors that could cause rates to increase or decrease over time include:

  1. Increased borrowing costs
  2. Trends in consumer spending
  3. Significant changes in the housing market
  4. The value of the pound (GBP £)
  5. Increases or decreases in inflation rates
  6. UK employment statistics

UK economists are predicting rates will continue to fall this year and remain steady through 2025. We’re always watching out for any potential rate rises or economic factors that could affect UK interest rates and mortgages in general. You can stay up to date with the latest updates on our MPO News page.

Deciding to switch or apply for a new mortgage is an important choice and there isn’t one solution or answer that will work for everyone. You need to consider your own circumstances and make a decision based on what makes the most sense for you.

While Barclays, Santander and many other lenders currently have some good rates available, you should still look into any lender you choose before making a final decision for you. It’s key to consider any attached fees or specific benefits for each lender, so you know you are 100% happy with your choice.

If you’re uncertain if remortgaging is right for you or what lender will be best, it could be useful to talk to a qualified mortgage broker for proper advice.

More mortgage news and guides

Here’s a list of more of our latest news stories that may affect you if you own a home or are thinking of buying a home this year.

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