Mortgage rates fall as Nationwide Building Society, Santander and Barclays cut deals for buyers

The move marked one of the lowest headline rates currently available among major high street lenders.

Santander then introduced further cuts of up to 0.32 per cent across two, three and five-year fixed rate products targeted at first time buyers.

These cuts come just before the latest Consumer Price Index (CPI) figures are revealed on Wednesday, with experts recommending homeowners lock in deals immediately.

From February 17, Barclays reduced rates across six residential purchase mortgage products as part of the same competitive shift.

The rate reductions come as lenders compete more aggressively for new lending business following a slowdown in housing transactions during 2025.

Nationwide said its changes apply across multiple borrower groups including first time buyers, home movers, remortgage customers and product switchers.

The building society confirmed its lowest two-year fixed rate product is now priced at 3.54 per cent.

Santander has focused more heavily on first time buyer products, with entry level rates now starting from 3.92 per cent.

The bank has also introduced a product allowing purchases with a two per cent deposit through a five-year fixed rate product with no upfront fee.

The lender said the product is designed to support buyers who are struggling to build larger deposits.

David Morris, director of homes at Santander UK, said: "We're going into 2026 with a renewed focus on supporting first time buyers in a balanced and responsible way, with recent applications for our newly launched My First Mortgage showing there is real demand in the market for creative support from lenders."

Mortgage advisers said the cuts are focused on parts of the market where borrowers are most sensitive to price changes.

Craig Leigh, mortgage adviser at The Mortgage Broker, said: "Santander is cutting higher loan to value fixed rates for first time buyers by up to 0.32 per cent, which is relevant for people buying with smaller deposits."

Industry estimates suggest up to 1.8 million borrowers are expected to renew mortgage deals during 2026.

Borrowers who fixed mortgage rates during 2023 or later may benefit from falling rates if current pricing trends continue.

Mortgage market analysts said a similar competitive pattern was seen during 2024 when lenders began cutting rates after periods of higher borrowing costs.

During 2025, weaker housing transaction levels led lenders to focus more heavily on remortgage customers rather than new purchases.

Market data shows lenders increasingly competing on refinance deals as existing borrowers reached the end of fixed rate terms agreed during earlier higher rate periods.

Mortgage specialists said there is no guarantee that current rate reductions will continue throughout 2026.

Analysts said lender pricing decisions will continue to be influenced by funding costs, swap rates and wider economic conditions.

Advisers said borrowers should compare overall borrowing costs rather than focusing solely on headline rates.

Mr Leigh said: "Lower fixed rates can reduce the cost of borrowing, but you still need to compare the total cost once fees and early repayment charges are included."

Financial experts said arrangement fees, legal costs and early repayment charges can significantly change the total cost of mortgage borrowing.

Mortgage advisers said borrowers should assess affordability over the full fixed term rather than basing decisions solely on short term rate changes.

Lenders continue to monitor borrower demand and market competition as part of ongoing pricing reviews across mortgage product ranges.

Housing market analysts said competition between major lenders typically increases when transaction volumes fall and lenders seek to maintain lending volumes.

Mortgage brokers said borrowers approaching the end of fixed terms should begin reviewing options several months before deals expire to secure competitive pricing.

Regulators continue to monitor mortgage affordability standards and lending criteria across the market.