Mortgage Price Wars as Two Major Lenders Slash Rates in Boost to Homeowners and First Time Buyers

Nationwide and Santander Spark Mortgage Rate Wars

Two of the biggest players in the UK mortgage market, Nationwide and Santander, have taken a significant step by slashing their rates. This move is expected to reignite competition among major lenders and benefit homebuyers and those looking to renew their existing deals.

Nationwide’s Cuts

Nationwide announced last week that it would be cutting its best rate by up to 0.16 percentage points, bringing the lowest two-year deal down to a remarkable 3.54%. This is particularly beneficial for those with larger deposits, as Nationwide has cut across first-time buyer, home mover, remortgage, and switcher ranges.

“Nationwide’s reductions matter because they target parts of the market where pricing has been most sensitive,” explained Craig Leigh, a mortgage adviser at The Mortgage Broker to The Independent. “Santander is cutting higher loan-to-value fixed rates for first-time buyers by up to 0.32%, which is relevant for people buying with smaller deposits.”

Santander’s Push

While Nationwide’s cuts are aimed at borrowers with larger deposits, Santander has taken a different approach. It recently launched a scheme for those buying with just a 2% deposit, offering a five-year fix with no initial fee and rates starting from 3.92%. This strategy is clearly targeted at the first-time buyer market.

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.”

Market Implications

The cuts by Nationwide and Santander are part of an ongoing trend. Last year, when a couple of lenders started to drop rates, others quickly followed to get a share of the market. With property sales stuttering last year, there was renewed emphasis on getting clients onboard.

Experts suggest that these rate reductions could lead to increased competition among major banks and building societies. For consumers, this means lower fixed rates can reduce borrowing costs, but it’s important to compare total costs once fees and early repayment charges are included.

“The smart play for consumers is to judge every mortgage on the total cost, not just the headline rate,” said Craig Leigh. “Fees, incentives, and early repayment charges can change the outcome.”

Conclusion

The mortgage market in 2026 could see a new wave of competition as lenders vie for clients. While the exact impact remains to be seen, these moves by Nationwide and Santander are positive signs for those looking to secure a better deal on their mortgages.