Good news for homebuyers! Santander is shaking up the mortgage market with the cheapest two-year fixed-rate deal we’ve seen in over a year.

From Tuesday, you can get a two-year fix at just 3.99%, a full percentage point lower than any other deal currently available. This is a golden opportunity for those looking for some short-term security in these uncertain times.

What’s the catch?

This bargain rate does come with a few conditions:

• You’ll need a hefty deposit of at least 40% of the property value.
• There’s a £999 fee to remortgage.

Are other lenders likely to follow suit?

Experts seem to think so. Mortgage brokers are predicting a domino effect, with other lenders expected to slash their rates soon to stay competitive. This is great news for borrowers, who could see even more affordable deals popping up in the near future.

What about longer-term fixes?

If you’re looking for a longer-term commitment, several five-year fixed-rate mortgages are available for less than 4%. However, locking yourself into a longer-term deal now might mean missing out on potential future savings if rates continue to fall.

Why is this happening now?

Mortgage rates have been gradually falling for months, but this latest drop is particularly significant. Several factors are contributing to this trend:

• Swap rates: These rates, which heavily influence fixed-rate mortgages, have been falling due to expectations that the Bank of England might soon cut interest rates.
• Increased competition: Lenders are vying for business, leading to more competitive rates.

What about the Bank of England’s interest rate decision?

The Bank of England is expected to keep interest rates on hold this Thursday. However, many experts believe a rate cut is on the cards for later in the year, which could push mortgage rates down even further.

A word of caution:

While these low rates are certainly tempting, remember that mortgage affordability is about more than just the interest rate. Consider all associated costs, like fees and charges, and ensure the monthly repayments fit comfortably within your budget.

Don’t forget: This offer is only for those buying a new home and not for remortgaging an existing property.

What does this mean for you?

This is a positive sign for the housing market, potentially making homeownership a little bit more attainable for those who can meet the criteria. Keep an eye out for new deals from other lenders – you might just find your dream home sooner than you think!