Following the recent reduction of the Bank of England base rate from 0.25% to 0.10%, we’re announcing the following changes.

Effective from the beginning of April:

  • Santander and Alliance & Leicester Standard Variable Rate will reduce from 4.99% to 4.49%.
  • All tracker mortgage products will reduce in line with base rate, including  Santander’s Follow-on Rate which will reduce from 3.50% to 3.35%. 

Effective from the beginning of May:

  • The Santander and Alliance & Leicester Standard Variable Rate will reduce from 4.49% to 4.34%.

If your mortgage is affected, we’ll write to you to confirm the change to your interest rate and how much your new monthly payments will be. You’ll receive this letter at least 5 days before your monthly payments change.

How does the Bank of England base rate affect me?

The type of mortgage you have will determine whether you could be affected by a change to the Bank of England base rate.

Follow-on Rate (FoR)

Santander’s Follow on Rate (FoR) is currently 3.35% (Bank of England base rate plus 3.25%).

Santander’s FoR is a variable rate that all mortgage deals taken on or after 23 January 2018 will automatically transfer to when the initial product period ends. The FoR tracks, and is directly linked to, the Bank of England base rate, so will always move in line with changes to the base rate. This means your interest rate and monthly payments will move up and down as base rate changes.

Find out more about the Santander Follow-on Rate

Standard Variable Rate (SVR)

Santander and Alliance & Leicester SVR will be 4.49% from the beginning of April.
Santander and Alliance & Leicester SVR will be 4.34% from the beginning of May.

SVR is the rate that all mortgage deals taken before 23 January 2018 automatically transfer to when the initial product period ends.

The Santander and Alliance & Leicester SVRs are managed rates and not directly linked to the Bank of England base rate, so changes to base rate may not always result in a change to the SVRs. Other factors can also influence the rates we set.

SVRs are variable rates so payments may move up or down.

Tracker rate mortgage

Tracks the Bank of England base rate for a set period of time. Your monthly payment will go up or down depending on movements to the base rate, so you need to be sure that you would be able to afford the payments should interest rates increase.

Lifetime Tracker and Flexible Offset mortgages are guaranteed to track the Bank of England base rate for the life of the mortgage.

Fixed rate mortgage

You choose to fix the interest rate over a number of years, such as two, five or sometimes ten years. Your monthly payments will stay the same, meaning you’ll know exactly what you’ll pay each month over a set period of time.

You’re protected from increases to the Bank of England base rate during the product term. It also means that you won’t be able to take advantage of any potential decreases in the Bank of England base rate during the fixed rate product term.

If you're not sure what type of mortgage you have, you can check your original mortgage offer, annual mortgage statement or the mortgage account details screen in Online Banking

What can I do if I am worried about how a change in interest rates will affect me?

Work out how a change to the Bank of England base rate could impact your monthly mortgage payments by using our mortgage calculator 

Use our handy budget planner to work out how much you spend each month. You can then consider where you may be able to make a change to your outgoings if you need to.

If you’re coming to the end of your existing deal, are on our Standard Variable Rate or a deal with no early repayment charge you may be considering choosing a new deal. You can change your deal online or over the phone.

If you're still worried about a change in your interest rate and how you will make your monthly mortgage payments, we can help 
 

What can I do if I don’t think I’ll be able to pay my mortgage because I’ve been affected by the Coronavirus (Covid-19)?

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