Santander raises mortgage rates for second time in four days

High street bank Santander has increased its mortgage interest rates for the second time in four days, in the latest sign of fixed-rate prices are climbing back up.

The lender said it was increasing certain residential rates and all of its rates for buy-to-let mortgages. Mortgage rates will increase by as much as 0.22% for homeowners and as much as 0.26% for landlords.

The changes will come into effect today (3 May).

It comes just days after the last increase. Other lenders like Nationwide and NatWest have also increased mortgage rates this month.

Lenders slashed mortgage rates at the start of the year, in anticipation of the Bank of England cutting its own base rate in the first half of the year. But City traders and economists have become increasingly convinced that buyers and homeowners will have to wait longer for a cut.

The Bank’s next meeting is just a week away, but markets suggest that the Monetary Policy Committee is almost certain to leave rates at a 14-year high of 5.25% again.

Stephen Perkins, managing director at Yellow Brick Mortgages, told industry news agency Newspapge that lenders were reluctant to have the cheapest offer on the market.

He said: “The current market feels like a chaotic game of pass the parcel, where lenders are scrambling to avoid holding the lowest rate when the music stops. With rates increasing multiple times within the same week, advising clients becomes a real challenge in this ever-shifting landscape.”

Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said: “"While it's frustrating that Santander's pricing wasn't accurate on Monday, they've at least granted brokers and borrowers until close of business tomorrow before implementing rate increases. However, the promising start to the year feels like a distant memory, and it seems unlikely that rate reductions will be coming anytime soon."

Figures earlier this week suggested that the recent rebound in mortgage rates was putting downward pressure on house prices. The latest  Nationwide House Price Index showed prices declining in April.

According to Moneyfacts, the average two-year fixed residential mortgage rate today is 5.91%, while the average five-year fixed residential mortgage rate is 5.49%.