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Highlights:
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Santander UK withdraws eight five-year fixed-term mortgage products, signaling a potential end to recent competitive pricing among lenders.
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The move follows similar actions by Coventry Building Society, which has also adjusted its mortgage offerings.
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Increasing wholesale swap rates and market uncertainties are contributing to changes in the mortgage landscape.
In a notable shift within the mortgage market, Banco Santander {LSE:BNC} UK has announced the temporary withdrawal of eight five-year fixed-term mortgage products, a move that may signal the conclusion of the recent price war among lenders. This withdrawal includes Santander's most competitively priced mortgage option, which offers a fixed rate of 3.68% for borrowers with a deposit of at least 40%, accompanied by a £999 fee.
Santander’s decision comes in the wake of similar changes made by Coventry Building Society, which has also restructured its mortgage offerings. This trend reflects a broader adjustment among major lenders as they respond to fluctuating market conditions.
Market analysts attribute these recent developments to rising wholesale swap rates, which are closely linked to gilt rates. The yield on the benchmark 10-year gilt has increased significantly, rising from 3.75% in mid-September to the current rate of 4.23%. This increase in yields is indicative of shifting market dynamics and influences the pricing strategies of mortgage lenders.
Furthermore, there is growing apprehension regarding the level of public borrowing that the government may undertake in the upcoming Budget. Coupled with geopolitical tensions, such as the situation in Lebanon, these factors have created a sense of caution in money markets.
As lenders reassess their mortgage products in light of these economic indicators, borrowers may find that options previously available at competitive rates are becoming more limited. The adjustments by Santander and Coventry Building Society reflect a cautious approach to lending amid changing financial conditions. Stakeholders in the mortgage market are closely monitoring these developments, as they could significantly impact borrowing costs and access to credit in the near future.
