Earlier this month IFA Magazine shared the news that Santander were to become the first lender to offer a 2-year fixed rate deal below 4%. In a period of 5% plus being the norm, this was seemingly a groundbreaking moment in the mortgage market.
However, in order to see what impact this announcement would truly have to customers and advisors, we asked our Mortgage and Property Editorial Panel, a group of brokers, advisors and industry professionals, for their opinion on how this will change the offers of other lenders. If it’ll make a difference in encouraging buyers into the market and what it means for the mortgage market more generally.
John Fisher, Mortgage Adviser at True Potential Wealth Management said: “While a headline rate below 4.00% is great news for bringing confidence to the market, it will do little to help most first time buyers due to the requirement of a 40% deposit. In addition, working in the North of England with smaller mortgages there will be more suitable products in the low 4.00% bracket with no fee.
“But anything that can be said to be good news on rates has to be a good thing.”
Nigel Panter, Director at Bespoke Mortgage Services Limited, said: “It’s good news that Santander has become the first lender to offer a sub 4% 2 year fixed rate and that will hopefully get the attention of the other mainstream lenders to follow suit. It’s a good start and if the Bank of England gives a further rate reduction today that might fuel further cuts across the board from other lenders.
“We did have rate cuts at the beginning of the year from several big lenders such as HSBC, however this was shortlived and showed the market was still flat. I am hopeful that this could be the start of a recovery in the market with lower rates and hopefully this spilling into the BTL sector with ICR’s coming down and aiding rental affordability.
“Time will tell but this is a good bit of news, albeit with a caveat of needing a lower bank base rate and lenders to also follow suit to give reassurance to our clients that the market is in a better place and any plans they may have on hold could be worth dusting off and refreshing for hopefully a buoyant last quarter and start to 2025”
Johnny Dunn, Chief Relationship Officer at DNA Financial Solutions, said: “While it’s been hailed as a milestone, Santander’s 2-year fixed-rate deal below 4% isn’t entirely groundbreaking. If we factor in the buy-to-let market, sub-3% rates have been available for quite some time. What is refreshing, however, is the noticeable reduction in hefty arrangement fees that typically come with these deals. In recent months, we’ve seen a trend of lenders, like Skipton Building Society, offering product transfers with rates below 4%, and in some cases, even sub-3%, extending beyond this year. Yes, some of these deals come with eye-watering arrangement fees—3% to 5%—but for many, it’s been a lifeline to help stretch their monthly budgets further.
“Will other lenders follow Santander’s lead? Absolutely—and, in fact, some already have. Competition among lenders is fierce, and buyers are always drawn to the allure of a “historic low.” But will this shift the market dramatically? Not overnight. Buyers are still cautious, navigating inflation, rising costs, and broader uncertainty. And with the base rate unlikely to change significantly anytime soon – like todays static announcement, especially with the autumn budget looming too, I don’t see this sparking a rush in the short term. However, as the saying goes, “property doubles every 10-15 years,” so savvy investors might view this as a small window of opportunity—even if it’s just a slightly ajar one.”
George Christou, owner of Bournemouth Mortgages, said: “Fantastic news that there is a 2-year fixed rate below 4% available. This makes the choice between a 2 and 5 year fixed a hard one to make.
“It’s usually a 5-year fixed that has the best rates, so it’s great to see this expanded, its good news, but there’s a long way to go as these rates are restricted to a 40% deposit. It would be great to see more rate reductions for people with a lower deposit, to help them purchase a property and move out of their rented accommodation, or mum and dads house.
“Since the last Base Rate reduction in August rates have been coming down from all lenders, and in turn there has been more movement in the property market and residential purchases have gone up. All indications are that this is set to continue for the foreseeable, now’s a good time to buy and remortgage. Lenders have been reducing interest rates over the past few weeks and would like to see more of this price war between the high street lenders.
“Unfortunately, the Bank of England hasn’t reduced its base rate any further today, I expect a reduction in the new year and for rates to eventually stabilise at around the 3% mark by this time next year, and this will become the new norm – for now.”
Gary Doogan, Consultant at Mortgage Required, said: “With Santander offering a 3.99% 2 year fixed rate, this will grab headlines and give borrowers some succour, that rates are becoming more competitive across the board, not just on 5 year fixed deals. Also, it is aimed at borrowers with at least 40% deposit or equity, hopefully similar offerings may be on the cards for the higher loan to value limits.
“In my view, this will heat up competition with other lenders and although it may encourage some buyers into the market, many more will still be taking the “wait and see” view thinking how much further can rates dip.
“All eyes will be on the Chancellors budget in October and what rate cuts the Bank of England will put into effect. I do not think that it will be enough, at this stage, to generate a marked uptick in the housing market activity, but does indicate a positive direction of travel.
Katie King, Mortgage & Insurance Broker at The Mortgage Social said: “It’s fantastic to see a major lender like Santander taking the lead on 2-year rates! This move is likely to push other lenders to follow, bringing 2-year rates into a more competitive position compared to the 5-year options. As a result, borrowers will have greater flexibility in their choices, which is particularly beneficial for those who prefer not to commit to a 5-year term. This could be just the encouragement many need to enter the market.”
