Britain’s biggest building society, Nationwide, is set to slash some of its mortgage rates to below 4%.
The lender announced a decrease of up to 0.25 percentage points across selected two, three, and five-year fixed-rate mortgages, with the new offers starting from Friday. Rates as low as 3.99% will be available for current customers seeking new deals as well as new customers looking to remortgage.
A “switcher” mortgage at 3.99%, for a five-year term, will also be part of the new offerings for existing Nationwide borrowers nearing the end of their current mortgage agreement. To qualify, borrowers must have a 40% deposit, and a £999 fee will apply.
Another deal pegged at a 3.99% rate for five years is aimed at borrowers with a 40% deposit interested in remortgaging. This option comes with a fee of £1,499.
For products with a £1,499 fee, Nationwide stipulates a minimum loan size of £300,000. This move follows Santander UK’s recent decision to withdraw some of its 3.99% rate products. Last week, the bank discontinued its 3.99% five-year fixed-rate mortgage offerings.
Finance expert Rachel Springall from Moneyfactscompare.co.uk commented on the changes: “It is positive to see one of the biggest lenders in the country cut its fixed mortgages and joining a small number of lenders that offer a sub-4% fixed-rate deal.
“However, it is worth noting, despite grabbing headlines, that the lowest rate mortgages do not always offer the best package. The right choice will depend on someone’s circumstances, so it wise to seek advice before applying. There has been a steady flow of rate cuts over recent days, as there have been around a dozen lenders cutting fixed mortgages since the start of this week, good news for borrowers.”
“Lenders will no doubt be watching swap rates (which are used by lenders to price mortgages) closely to adjust their future rate expectations in the coming weeks, so it will be interesting to see how long the lowest rates can be sustained for, or indeed, if other lenders make significant cuts.”
Nicholas Mendes, mortgage technical manager at broker John Charcol, said: “Fixed-rate mortgages are continuing to edge lower, mainly due to a notable drop in swap rates, particularly on two- and five-year terms. These have now fallen and remain stable below 4%, marking a significant shift from last month.”
“However, the gap between two-year and five-year swaps remains tight, making it difficult for lenders to confidently introduce sub-4% deals, especially on shorter fixes. While further reductions are possible, much depends on whether swap rates remain steady.”