Home Money Santander ‘temporarily’ withdraws fixed mortgage offers: is it a precursor to rising rates?

Santander ‘temporarily’ withdraws fixed mortgage offers: is it a precursor to rising rates?

0 comments
Smokescreen? Santander says it will temporarily withdraw some fixed rates at 10pm tonight and reactivate them next Tuesday. But one mortgage expert suspects this will happen with higher rates.
  • Withdrawn transactions include Santander’s market-leading 3.68% five-year fixed

Santander has temporarily withdrawn a number of its mortgage deals in a further sign that home loan prices may start to rise again.

From 10pm tonight, the bank says it will withdraw eight fixed rate deals, including its market-leading 3.68 per cent five-year fixed rate.

He says he will relaunch these agreements starting next Tuesday. However, one mortgage expert suspects the relaunch will come with higher rates.

Nicholas Mendes, mortgage technical manager at broker John Charcol, said: “I suspect this ‘temporary withdrawal’ means the lender will pause, review and restart at a higher rate.”

> What’s next for mortgage rates in 2024?

Smokescreen? Santander says it will temporarily withdraw some fixed rates at 10pm tonight and reactivate them next Tuesday. But one mortgage expert suspects this will happen with higher rates.

If correct, this means that Santander’s five-year fix of 3.68 per cent will cease to exist from tonight.

This was available to house-movers and first-time buyers with deposits of at least 40 per cent.

This will leave Barclays as the lowest five-year fixed deal on the market at 3.71 per cent.

In addition to the temporary withdrawal of its market-leading agreement. Santander is also removing its five-year 3.92 per cent fix for those buying with a 25 per cent deposit.

Those who buy with a 15 per cent deposit will also lose access to their 4.15 per cent five-year fix.

> Best mortgage rates for first-time buyers

Why is Santander temporarily withdrawing operations?

Mortgage lenders price their fixed mortgage rates based on Sonia swap rates, funding targets, borrower demand and general economic sentiment.

Sonia swaps are the easiest way to interpret where fixed rates are headed.

Simply put, Sonia swap rates essentially show what lenders believe the future will hold with respect to interest rates.

When Sonia swaps rise high enough, it often results in fixed mortgage rates rising and vice versa when they fall.

In recent weeks sonia swaps have risen again. As of October 9, two-year swaps were at 4.05 percent and five-year swaps at 3.79 percent.

This marks an increase compared to September 20, when two-year swaps were at 3.82 percent and five-year swaps were at 3.52 percent.

Expert: Nicholas Mendes, mortgage technical director of the John Charcol brokerage, suspects that this

Expert: Nicholas Mendes, mortgage technical director at brokerage John Charcol, suspects this “temporary withdrawal” means Santander will relaunch at a higher rate

Mendes believes a major factor behind Santander’s product recalls could well be profit margins and pricing.

“Lenders set mortgage rates based on market factors such as swap rates, which influence the cost of financing fixed-rate mortgages, and competitive offers,” Mendes said.

‘Normally, lenders set mortgage prices a fortnight in advance. If market conditions change during that period (for example, if swap rates increase), a previously profitable product may no longer make financial sense.

‘In such cases, the lender may withdraw the product to avoid offering a mortgage that could result in financial loss.

‘After reassessing the market, they are likely to reprice the product upon re-entry, often with a higher interest rate or modified terms to restore profitability.

However, Mendes also says that Santander’s decision could be due to service levels and high demand from borrowers.

“If a mortgage product is too competitive in the market, meaning that the lender’s offer is more attractive than others, this can lead to an increase in applications,” Mendes added.

‘While high demand appears positive, it may impact the lender’s ability to process applications efficiently.

‘To maintain good service levels and ensure applications are processed in a timely manner, the lender may need to temporarily withdraw the product to manage its workload.

“Once they catch up, they will be able to reintroduce the product, potentially at the same pace or with adjusted conditions.”

> Best buy-to-let mortgages for landlords

money" data-version="2" id="mol-6d803460-127b-11ee-b5fa-b53b886c1257" data-permabox-url="https://www.dailymail.co.uk/money/mortgageshome/fb-13571667/How-new-mortgage.html" wp_automatic_readability="35.272925764192">

How to find a new mortgage

Borrowers who need a mortgage because their current fixed-rate agreement is ending or because they are buying a home should explore their options as soon as possible.

What happens if I need to remortgage?

Borrowers should compare rates, talk to a mortgage broker and be prepared to take action.

Homeowners can close a new deal six to nine months in advance, often with no obligation to accept it.

Most mortgage agreements allow fees to be added to the loan and are only charged when requested. This means borrowers can get a rate without paying expensive processing fees.

Please note that by doing this and not paying off the fee upon completion, interest will be paid on the fee amount for the entire term of the loan, so this may not be the best option for everyone.

What happens if I am buying a house?

Those with agreed-upon home purchases should also try to lock in rates as early as possible, so they know exactly what their monthly payments will be.

Buyers should avoid overreaching and be aware that home prices may fall as higher mortgage rates limit people’s borrowing capacity and purchasing power.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to speak to a broker.

This is Money has a long-standing partnership with free broker L&C, to provide you with free, expert mortgage advice.

Interested in seeing today’s best mortgage rates? Wear This is the best mortgage rate calculator from Money and L&C to show offers that match your home value, mortgage size, term, and fixed rate needs.

If you’re ready to find your next mortgage, why not use L&C’s Online Mortgage Finder? It will search thousands of offers from over 90 different lenders to discover the best deal for you.

> Find your best mortgage deal with This is Money and L&C

However, please note that rates can change quickly, so if you need a mortgage or want to compare rates, speak to L&C as soon as possible so they can help you find the right mortgage for you.

Mortgage service provided by London & Country Mortgages (L&C), which is authorized and regulated by the Financial Conduct Authority (registration number: 143002). The FCA does not regulate most buy-to-let mortgages. Your home or property can be repossessed if you don’t keep up with your mortgage payments.

You may also like