Another major lender pulls mortgage deals: what you need to know
Santander has become the latest major bank to pull its mortgage deals 'in light of changing market conditions'.
New mortgage applications will be blocked at 7.30pm this evening (Monday 12 June), before new deals with increased rates are introduced on Wednesday.
The high street bank has taken the decision as turbulence continues to grip the home loan market, with hundreds of products having been axed in the past three weeks.
Here, we look at why lenders are taking such action, and what impact it's having on mortgage rates.
Santander announces decision to pull mortgage deals
The bank has informed brokers it will be taking its fixed and tracker mortgage products for new customers off the market from 7.30pm today (Monday 12 June).
A spokesperson said: 'We continually review our products in light of changing market conditions.
'As we prepare for a relaunch of a full range of mortgage products from Wednesday morning, we will not be accepting new applications via intermediary and online channels temporarily from this evening (Monday).
'Our product transfer range remains fully available and customers who have already applied will not be impacted.'
Santander has offered very competitive rates compared with other leading lenders - topping most of the categories in our cheapest mortgage rates round up. But from 7.30pm, the deals will be pulled.
Graham Cox, founder of the broker firm Self Employed Mortgage Hub, said: 'Any bank or building society that comes out cheapest is getting flooded with too many applications to cope, which is no doubt what’s happening with Santander.'
- Find out more: applying for a mortgage
Can I apply for a Santander mortgage before the deadline?
Customers can still apply for a mortgage deal before 7.30pm tonight (Monday).
Those who apply before the cut-off will not be affected, and could therefore still secure a mortgage with Santander's current mortgage rates.
New rates will be introduced on Wednesday, and customers will only be able to apply for them - not the old rates.
- Find out more: Santander mortgage review
Santander follows in footsteps of other lenders
Other big players in the mortgage sector such as Halifax and Nationwide have been pulling deals and reintroducing products with increased rates.
Last Thursday, HSBC made the decision to temporarily withdraw mortgage rates available via broker services, to help ensure the bank could stay within its operational capacity.
Its mortgages are now back on sale through brokers, although its rates have increased by between 0.10 and 0.45 percentage points.
- Find out more: mortgage lenders pull hundreds of deals
What are average mortgage rates?
Rates had been coming down month-on-month, however, they have sharply increased since mid-May.
In the space of three weeks, the average two-year fix rose from 5.33% to 5.87%, while the average five-year fix has also risen, going from 5.01% to 5.51%, according to Moneyfacts.
| Type of mortgage | Average rate on 12 June 2023 | Average rate in June 2022 |
|---|---|---|
| Two year-fix | 5.87% | 3.24% |
| Five-year fix | 5.51% | 3.36% |
As a result of increased rates, experts at Hargreaves Lansdown say anyone whose deal comes to an end this year is set to see their monthly payments increase by an average of £192.
Why are mortgage rates increasing again?
Gilt yields and swap rates - which determine the cost of borrowing for lenders - continue to climb in the wake of last month's inflation figures, which recorded CPI inflation at 8.7%
Those higher-than-expected figures have fuelled predictions that the Bank of England will have to raise interest rates even further to combat rising prices.
The Bank's base rate - which plays a pivotal role in determining mortgage rates - currently stands at 4.5%, following 12 consecutive increases, and is now expected to hit 5.5% later this year.
Despite the influx of hikes from lenders, it is not all doom and gloom. From Tuesday, TSB says it will reduce the cost of some of its new deals by up to 0.4 percentage points - showing there could soon be potential for a calming in the market.
What to do if you need to remortgage
- Find out when your current deal ends: if you have less than six months left on your fixed term, shop around for a new mortgage. If you have longer left, you might need to pay early repayment charges if you remortgage early. Take advice from a mortgage broker on your options.
- Work out your current loan-to-value (LTV): your repayments and any increases in the value of your home may mean you can remortgage at a lower LTV.
- Get a quote from your current lender: if you're coming to the end of your term, this may be available in your online mortgage account. If it's not, you might need to contact your lender.
- Research deals from other lenders and take independent advice: use comparison sites to get an idea of the rates currently available and consider taking advice from a broker.
- Decide on a mortgage term (eg two-year or five-year): there's little to choose in rates, so pick a term based on your own circumstances.
- Keep an eye out for any additional upfront fees: some deals might not be as cheap as they first seem. Compare the overall cost before settling.
You can find out more in our full story on remortgaging. If you're worried about making your mortgage payments, see our guide on what to do if you can't pay your mortgage.
