Santander has launched a new follow-on rate for people coming to the end of their mortgages, tracking 3.25 per cent above the base rate.
The rate replaces the current standard variable rate for customers coming to the end of their mortgages, which is 4.74 per cent.
Products applied for before Wednesday (23 January) will move to the SVR, but mortgages applied for after this time will move to the new rate, which is currently 3.75 per cent.
Santander increased its SVR in November, passing on the full base rate hike.
Santander isn't the only lender operating a dual SVR policy.
Nationwide's customers who took out their mortgages before mid-2009 (depending on brand) revert to a base mortgage rate at 2 per cent above the Bank base rate, while those who took out their mortgages after this date revert to a rate of 3.99 per cent, almost 1.5 per cent higher.
David Hollingworth, associate director of communications from London & Country Mortgages, said the move was positive, but "won’t remove the need for borrowers to shop around to get the best rate".
He said: "It is a positive move for new borrowers and helps to bring Santander more in line and even undercut some of the other lender's reversionary rates (Halifax and Nationwide are 3.99 per cent).
"Of course this won't affect existing borrowers who have already drifted onto the SVR at 4.74 per cent.
Although a reduction in rate has to be a welcome move it won’t remove the need for borrowers to shop around to get the best rate."
