Santander has launched its lowest ever fixed rate mortgage product.
The new 60 per cent loan-to-value (LTV), 18 month fixed rate of 0.99 per cent comes with a £1,499 product fee and offers customers a very competitive short term borrowing option.
In addition, Santander has added a £250 cashback to its lowest ever 60 per cent five-year fixed rate of 1.89 per cent with a £999 product fee, available on purchase and remortgage.
For customers with smaller deposits, Santander has reduced the rate on the 90 per cent LTV two-year fixed rate, first-time buyer exclusive, to 2.24 per cent with a £999 product fee.
Santander for Intermediaries has also launched new rates across its range of Help to Buy: equity loan products.
There is now a 75 per cent LTV two-year fixed rate deal at 1.54 per cent, with a £999 product fee, a 75 per cent LTV two-and-a-half year fixed rate deal at 1.64 per cent, with a £999 product fee, plus a 75 per cent LTV two-and-a-half year fixed rate deal at 2.04 per cent, with a zero product fee.
The shorter the term the bigger the impact of fees and so a £1,499 fee has a huge impact on overall value on a rate fixed for as short as 18 months.Ray BoulgerMiguel Sard, managing director of mortgages at Santander, said: “We appreciate that in today’s interest rate environment, some customers like to lock into a rate and value knowing the certainty of their monthly re-payments.
“This new rate completes our competitive range of fixed rate products, built to offer customers greater choice.
“These products are designed to support all segments of the market, whether customers are looking to get a foot on or move up the housing ladder.”
In addition, Santander 123 current account customers who pay their monthly Santander mortgage payment by direct debit will receive 1 per cent cashback on maximum monthly mortgage payments of up to £1,000.
Ray Boulger, senior technical manager of John Charcol, said although Santander was promoting 0.99 per cent fixed for 18 months as its lowest ever fixed rate other lenders have offered this rate for longer - two years.
Mr Boulger said: “What is more interesting is that Santander is increasing the choice of fixed rate terms by offering an 18 month and two-and-a-half product.
“However, the shorter the term the bigger the impact of fees and so a £1,499 fee has a huge impact on overall value on a rate fixed for as short as 18 months.
“For example, on a £200,000 mortgage a £1,499 fee is equivalent to an extra 0.5 per cent on the interest rate, increasing the effective rate by 50 per cent.
“This product will only suit people who need a large mortgage and want to avoid early repayment charges for more than 18 months, perhaps because they plan to move in the near future.”
emma.hughes@ft.com
