Nationwide cuts mortgage rates despite Bank of England’s decision

Mortgage rates are heading lower after Britain’s biggest building society announced it’s cutting rates. From tomorrow, Nationwide will lower rates across some of its deals by up to 0.18 percentage points.

It comes within hours of the Bank of England’s decision to keep base rate on hold at 4 per cent and amid speculation that interest rates won’t be lowered again until next year. It also comes after a spate of lenders increased mortgage rates in recent weeks. First-time buyers and those looking to buy a new home will particularly benefit from these latest cuts.

For example, Nationwide’s lowest two-year fix for a first-time buyer with a 25 per cent deposit will reduce to 4.09 per cent with a £999 fee. On a £200,000 mortgage being repaid over 25 years that would equate to paying £1,066 a month. Home movers also stand to benefit. Someone moving home with a 40 per cent deposit will be able to bag a market leading 3.8 per cent two-year fix with Nationwide, with a £1,499 fee attached.

On a £200,000 mortgage being repaid over 25 years that would work out as £1,034 a month. Meanwhile, someone moving home with a 20 per cent deposit will be able to get a three year fix with Nationwide at 4.24 per cent, with a £999 fee. ‘It is great to see Nationwide lowering rates again and offering two-year fixes from 3.8 per cent and five-year fixes from 3.94 per cent,’ said Aaron Strutt of mortgage broker Trinity Financial said: 

‘Most of the big lenders have been pushing up their fixes recently so this is a welcome reversal from the price hikes we have been seeing. ‘Many of Nationwide’s competitors will probably look at this move and wonder how they are improving their pricing but as we know Nationwide likes to top the best buy tables to increase competition in the market. There are still decent rates to choose from at the moment.’

Nicholas Mendes, mortgage technical manager at John Charcol says that we could possibly see further cuts aimed at those buying with smaller deposits. ‘Margins are already thin, so I’d expect only marginal tweaks there, mainly to stay a nose ahead of competitors,’ said Mendes. ‘We’ll likely see one or two lenders mirror the move and then reprice upwards again to manage service levels.

‘The real battleground now is higher loan-to-values. That’s where we haven’t seen the same pace of cuts yet, and where I’d expect more meaningful price competition next. ‘Good news for buyers with smaller deposits and for remortgagers who have built a bit of equity.’