A mortgage rate war has erupted with Nationwide the latest lender to slash home loan offers with the lowest two-year fix now available since 2022.
Many major lenders have cut rates across mortgage deals over the past two weeks including a host of high street banks
The sudden competition between lenders is in response to market interest rate expectations, with the Bank of England now considered more likely than not to cut interest rates again before the end of the year.
HSBC, Barclays, NatWest, Halifax and Santander have all cut rates over the past 10 days – some more than once.
However, Britain’s biggest building society has today decided to set the bar even lower with a number of best buys on offer tomorrow.
Nationwide has announced rate reductions of up to 0.25 percentage points for new and existing customers.
It says first-time buyers, home movers and those looking to remortgage and switch all benefit from these cuts.
Market leader: Nationwide has lowered its rates up to 0.25 percentage points for new and existing customers
Most notably, Nationwide is offering home movers with a 40 per cent deposit or more, a market leading 3.64 per cent rate.
The last time there was a widely available two-year fix that was lower than this was in September 2022, according to Moneyfacts, when rates accelerated after the Liz Truss-Kwasi Kwarteng mini-Budget, with its wave of unfunded tax cuts unsettling bond markets.
‘We have moved to some of the cheapest rates seen since the 2022 Budget, especially for those looking to buy a new property,’ said Justin Moy, managing director at Chelmsford-based EHF Mortgages.
‘With other high street lenders already dropping their rates over the last few days, there is a little bit of competition, plus greater expectations of base rate cuts on the horizon – good news for mortgage holders at least.’
On a £200,000 mortgage being repaid over 25 years, a 3.64 per cent rate would mean paying £1,016 each month.
The next best deal on the market is from Barclays, which offers a 3.73 per cent deal, albeit with a smaller product fee of £899 whereas Nationwide’s deal comes with a £1,499 fee.
This was briefly bettered by NatWest, which held top spot with its 3.71 per cent two-year fix for all but a few hours.
Aaron Strutt of mortgage broker Trinity Financial says rates seem to be moving lower with every passing day at the moment.
‘Nationwide has acted very quickly to undercut most of its competitors and bring out the cheapest two-year fix which really is well priced even if the rate does have a £1,499 arrangement fee.
Aaron Strutt of mortgage broker Trinity Financial
‘The lender has lowered most of its fixed rate mortgages which is very welcome news both for homebuyers and those needing to remortgage soon.
‘NatWest has literally just lowered its rates and was sitting top of the best buy tables.
‘There has been a lot going on in the mortgage market over the last few weeks with multiple banks and building societies consistently lowering their rates with some bringing them down twice in a week.’
Other stand out deals for home movers is a three year fix reduced to 3.75 per cent with a £999 fee.
Those buying with smaller deposits also stand to benefit. Someone buying with a 15 per cent deposit can now secure a 3.99 per cent rate with Nationwide.
As for households approaching the end of their current mortgage and looking for a new deal, Nationwide is offering a market leading two-year deal at 3.79 per cent or the lowest five-year fix at 3.84 per cent – both of course requiring at least 40 per cent equity in the home.
First-time buyers with the biggest deposits can get as low as 3.89 per cent with Nationwide, while those with a 10 per cent deposit can secure 4.35 per cent.
‘We’re making rate cuts across the majority of our fixed rate mortgage range with a number of sub-4 per cent products and a market-leading rate for home movers. ,’ said Carlo Pileggi, Nationwide’s head of mortgage products, said.
‘These changes will put Nationwide firmly on the radar for all borrower types as we aim to position the country’s largest building society as one of the most competitively priced lenders in the market.’
Mortgage broker Aaron Strutt welcomed the plethora of rate cuts suggesting more could be on the way.
‘The rate changes seem unlikely to slow down for a while given the number there have been recently,’ added Strutt.
‘If you do have a mortgage offer out from your bank or building society it would be a good idea to double check that the lender isn’t offering a better deal before it is too late.
‘There are cut off dates with many lenders so if your mortgage provider improves the rate then you need to act to switch to the better product otherwise you could end up paying significantly more than you need to for years.’
Michelle Lawson, director at Fareham-based Lawson Financial, urged people to secure deals while they are so low.
‘This is a bonfire bonanza for borrowers with more rate cuts coming from the big guns as a last drive for business before the year end,’ said Lawson.
‘Anyone with a mortgage product ending in the next four to six months should seriously consider securing something sooner rather than later before the Budget puts the flames out.’
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