Santander has announced a significant increase in its mortgage rates, marking its second adjustment this week alone. This follows a trend set by other major banks as the cost of borrowing for homes escalates rapidly.

Starting tomorrow, Santander will increase the interest rates on several of its fixed-rate mortgage deals. This adjustment could see rates rise by as much as 26 basis points. Homeowners and potential buyers are feeling the pinch, with the current rate for a five-year fixed mortgage aimed at those remortgaging with at least 40% equity standing at 4.4%. This rate, which is among the lowest in the market today, is set to climb from tomorrow.

Those looking to buy with a 25% deposit will also face higher costs. Santander’s most competitive offer, a two-year fixed mortgage at 75% loan-to-value, will jump from a current rate of 4.83% to a higher rate, compounded by a £999 fee.

The Buy-to-Let Sector Is Not Spared

Santander is also increasing the rates on its buy-to-let mortgage offerings, with hikes of up to 22 basis points. This decision aligns with broader market trends where over 20 lenders, including TSB, Halifax, HSBC, and Barclays, raised their rates last week.

Broader Market Movements

This week, the trend continued with NatWest and Nationwide also announcing increases in their mortgage rates. This series of rate hikes comes amid concerns from mortgage brokers about the ongoing rise in interest rates. Statements from industry experts highlight the challenging environment for both lenders and borrowers.

Expert Opinions on the Market

Ranald Mitchell, a director at Charwin Private Clients, expressed concerns, suggesting that if the trend of increasing rates continues, it could have severe repercussions for mortgage borrowers. Meanwhile, Stephen Perkins of Yellow Brick Mortgages likened the situation to a “chaotic game of pass the parcel,” with lenders reluctant to offer the lowest rates.

What Lies Ahead

Many are now looking to the Bank of England’s next move, with hopes pinned on a possible base rate cut during their meeting on May 9th. Gary Bush from MortgageShop underscored the difficulty of discussing mortgages with clients amid these rapid increases, expressing hope for intervention from the central bank.

However, with inflation still above the central bank’s target at 3.2% and financial markets not expecting a rate cut until possibly August, the immediate future remains uncertain for UK mortgage holders.