The lender has announced that its new mortgage deals will be launched on Thursday 13th February, at just 3.99%.
These are the first standard rates from a high street lender to drop below 4% since last November and the new deals will be available to both buyers and those remortgaging.
David Hollingworth, associate director at L&C Mortgages, said: “The improvement in the rate of inflation last month and recent rate cut seems to have reversed market anxiety about whether rates may have to stay higher for longer.
“That has been feeding through to mortgage rates in the last week, and underlines gradual improvement in the market, as fixed rates begin to ease back.”
Low rate, high fee
The lower headline rate is good news for borrowers but the deals do come with a large mortgage fee.
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Hollingworth explained: “These new rates are certainly a positive and the headline rate is bound to catch the eye. However, they do come with a bigger fee, of £1,999 for purchases or £1,749 for remortgages.
“Borrowers will therefore need to keep their wits about them and do their sums, to make sure that they are getting the best overall value.
“It will be those with large loans that will have the most to gain from the low rate, whereas those with smaller mortgages are likely to be better served by a lower or no fee and slightly higher interest rate.
“Lenders will generally have a range of rate/fee combinations on offer, so borrowers can tailor the deal choice to their own circumstances. Nonetheless this marks a significant shift in rates, as Santander looks to force the pace.”
