Rachel Springall, at financial data provider Moneyfacts, said that it was “only a matter of time” before sub-4% mortgages returned as a result of money market swap rates falling in recent weeks, coupled with a cut to the bank base rate.
The move follows a cut in the Bank of England base rate last week, from 4.75% to 4.5%, fuelling hopes that competition between lenders to chop mortgage rates could heat up.
“The millions of mortgage borrowers looking to refinance this year need some good news, so it’s safe to say there are big expectations for more lenders to compete on price to entice new business in the coming weeks.”.
Iain Swatton, director at Exemplar Financial Services, said Santander had “fired the starting gun” on a home loans price war by becoming the first big lender in 2025 to go sub-4% on two- and five-year fixed mortgages.
At the end of last year, post-budget expectations that UK interest rates would stay higher for longer prompted many mortgage lenders to push up the cost of their new fixed-rate deals.
