Nationwide has launched a new mortgage at the lowest available rate on the market for many homebuyers, as part of the latest slew of cuts from banks and lenders.
From Tuesday morning, the building society is reducing fixed rates by up to 0.3 percentage points.
This includes launching a five-year fix at 4.18 per cent and a two-year fix at 4.59 per cent for those with large deposits worth 40 per cent of the price of their property, which are usually referred to as 60 per cent LTV (loan-to-value) mortgages.
These rates are lower than the lowest available on the market but they can only be accessed by those taking out loans between £300,000 and £5m – with those taking out smaller mortgages facing higher rates.
The mortgages also come with a hefty £1,499 fee, though for some borrowers, they could be the best available options.
And the cuts come alongside reductions from other lenders too. Virgin Money is reducing multiple of its mortgage rates from Tuesday morning, as is Skipton Building Society.
The cuts were predicted by experts who spoke to i over the weekend, and follow drops by multiple lenders last week.
Aaron Strutt of Trinity Financial told i: “More of the lenders are lowering mortgage rates and undercutting their competitors to offer cheaper deals.
“Some of them have higher arrangement fee and lower rate products designed to make it easier to top the best buy tables. Before you choose a mortgage it is worth checking it makes sense to pay the higher fee especially if you do not need a large loan,” he added.
“It is good news that lenders are lowering their rates again particularly as there have been so many rate rises recently,” he said.
Before these recent reductions, the best mortgage rates across the whole of the UK for those moving home, rather than remortgaging on their current home, were:
- Two-year fix at 60 per cent LTV – Halifax, 4.63 per cent, £999 fee
- Five-year fix at 60 per cent LTV – HSBC, 4.19 per cent, £1,499 fee
The cuts from today are the latest in a long line of reductions in recent weeks.
Barclays and HSBC each cut their rates for the second time in two weeks on Friday which followed Halifax lowering rates on Wednesday and Santander cutting them on Thursday.
Mortgage rates broadly follow swap rates – which are based on long-term predictions of what will happen to the Bank of England base rate – but they can also be influenced by banks’ desire to attract business if more people are looking to buy homes.
The Bank of England base rate is set to fall in 2024, likely in either August or September.
But higher than expected inflation data between now and then could push back the likelihood of a rate cut in the near future, which might see mortgage rates rise again.