Santander launches new best buy mortgages: Rates close to 4% on two-year fixes

The cheapest two-year fixed-rate mortgages edged closer to 4 percent today as the major lender announced several new market-leading deals.

Santander cut its lowest two-year fixed rate from 4.55 per cent to 4.1 per cent, a new best buy.

The deal, which comes with a £999 product fee, is available to home buyers with at least a 40 per cent deposit.

Best buy: Santander today cut a number of its fixed rate mortgage deals and now offers the cheapest two-year fix on the market

The average two-year fix for buyers with the largest deposits is currently 5.09 per cent, according to Moneyfacts.

This would mean that someone paying off a £200,000 mortgage over 25 years would pay £1,180 a month.

With Santander’s deal at 4.1 per cent, someone in the same circumstances would pay £1,067 a month, which is £113 a month less than the average.

Five-year fixes are currently cheaper than two-year deals, with the cheapest hovering around 3.92 percent.

> What next for mortgage rates and how long should you fix?

Recent data from L&C Mortgages has shown that two-year fixed rate deals have become the most popular in recent months, despite being more expensive.

It emerged that more than half of homebuyers opted for a two-year fix in December.

This is despite the fact that five-year fixed rates are currently cheaper and have been the preferred product in the past.

Many of those who have a two-year fix do so in the hope that mortgage rates will be lower when they come to refinance.

Santander’s new market-leading rate could therefore likely prove very popular with buyers.

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The good news is that those with smaller deposits can also benefit from Santander’s latest rate cut.

Those buying with a 25 per cent deposit can now secure 4.15 per cent with Santander, the next lowest rate on the market.

Someone buying with a 15 per cent deposit can now also secure 4.52 per cent with Santander, also the best buy for the category.

Santander has also canceled a number of its five-year fixed-rate deals. In particular, buyers with a 15 per cent deposit can now secure a rate of 5.24 per cent with Santander – again the best deal on the market.

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