Lenders respond to Bank of England’s base rate cut
Santander and Virgin Money have announced rate reductions on their mortgage products, following the Bank of England’s decision to lower the base rate by 0.25% to 4.5%.
Santander UK confirmed that from March 3, all its tracker mortgage products linked to the base rate will decrease by 0.25%. This includes the Santander Follow-on Rate (FoR), which will drop from 8% to 7.75%. The bank’s standard variable rate (SVR) will also decrease from 7% to 6.75%.
Meanwhile, Virgin Money and its subsidiary, Clydesdale Bank, will also implement rate reductions from February 20.
Virgin Money’s standard variable rate will drop from 7.74% to 7.49%, while its buy-to-let variable rate will decrease from 8.24% to 7.99%. Its tracker rates, reflecting the base rate adjustment, will take effect from February 7.
Clydesdale Bank will lower its standard variable rate and offset variable rate to 7.49%, down from 7.74%. Its buy-to-let variable rate and offset variable investment housing loan rate will decline from 8.24% to 7.99%.
Read next: A guide to using Clydesdale for intermediaries
“With swap rates on a downward trajectory, lenders have scope to reduce mortgage rates further,” commented Nicholas Mendes, mortgage technical manager at broker John Charcol. “Lower swap rates ease borrowing costs, allowing lenders to adjust pricing and improve affordability for both existing homeowners and prospective buyers. However, the pace and extent of mortgage rate reductions will also depend on lender margins, inflation, and broader market competition.”
Mendes advised borrowers to carefully consider their options between fixed and variable rate mortgages.
“A fixed rate mortgage provides stability, locking in payments for a set period, whereas a variable-rate mortgage tracks the Bank of England’s base rate, offering potential savings if rates decline further,” he explained. “For those comfortable with a slightly higher initial rate, a shorter-term fixed deal or a tracker mortgage offers flexibility, allowing a switch should rates fall further. Conversely, a longer-term fix provides certainty and protection against potential market volatility.
“Whether to wait or lock in a deal now depends on personal financial circumstances, risk tolerance, and market conditions. Seeking professional mortgage advice is crucial to making an informed decision.”
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