Nationwide Building Society has announced it is cutting mortgage rates, in the wake of the Bank of England’s decision to pause base rate rises earlier today.
From tomorrow, the mortgage lender is cutting various fixed rate products by up to 0.31 percentage points.
It means Nationwide will be home to the cheapest five-year fixed rate product priced at 4.94 per cent.
It has leapfrogged Yorkshire BS, which launched a 4.99 per cent rate on Monday, and also Virgin Money, which today launched a 4.97 per cent five-year fix.
Nationwide Building Society has today announced further cuts to mortgage rates
Nicholas Mendes, mortgage technical manger at broker John Charcol, welcomed Nationwide’s decision to cut rates further.
He said: ‘Nationwide has reacted quickly following today’s announcement, making further fixed rate reductions.
‘Its last reductions came only last week, so seeing another repricing of its products so quickly is welcome news.
‘It will be interesting to see if we see other lenders follow suit and push ahead by the end of the week.’
Nationwide’s cheapest 4.94 per cent fixed rate deals will require fixing for either five years or 10 years.
The five-year fix is likely to prove popular given it is – for now – a market leader. It is available to any eligible home mover or first-time buyer, as long as they have at least a 25 per cent deposit. It also comes with a £999 fee.
The average five-year fix is currently 5.63 per cent. This means that someone getting the cheapest Nationwide deal on a £200,000 mortgage with a 25 year term would pay £1,162, compared to the market average of £1,244.
That could amount to a saving of £4,920 over a five year period.
The mutual has also launched a number of table-topping rates on its other mortgage products.
For example, its cheapest two-year fixed rate deal, available to just home movers (not first-time buyers) with at least a 40 per cent deposit, is now 5.44 per cent with a £999 fee.
This marginally beats Virgin Money’s 5.45 per cent deal with a £1,295 fee, which is the next cheapest two-year fix on the market.
Given the average two-year fixed mortgage rate is now 6.16 per cent, according to Rightmove, this Nationwide deal should popular, particularly given that borrowers are increasingly opting for shorter fixed deals in the hope that interest rates may begin to fall.
Someone getting the cheapest Nationwide two-year fixed deal on a £200,000 mortgage with a 25 year term would pay £1,221 compared to the market average of £1,308.
That could amount to a total saving of £2,088 over the two-year period.
Meanwhile those looking to remortgage at the moment have another decent option, thanks to Nationwide.
Nationwide’s cheapest five-year fix, which is available to those who have at least 40 per cent equity in their home (60 per cent loan-to-value), now charges interest of 5.2 per cent, with a £999 product fee.
There is a marginally higher rate of 5.26 per cent for those who have at least 25 per cent equity in their home.
Remortgage crunch: Roughly 1.6 million people will see a fixed rate mortgage deal expire next year, and most will be in for substantially higher rates
Compared to the rest of the market, it is beaten by Yorkshire BS’s five-year fix at 4.99 per cent rate (75 per cent loan-to-value) and First Direct’s, which is offering a 5.14 per cent rate (60 per cent loan-to-value).
Remortgage customers prepared to fix for 10 years with Nationwide could even slash their rate to 5.04 per cent.
Roughly 800,000 fixed mortgage deals will end during the second half of this year with a further 1.6 million due to remortgage next year.
Many are set to see their rate jump from below 2 per cent to something over 5 per cent.
Will mortgage rates keep falling?
Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages, believes that more rate cuts are now a certainty.
He said: ‘There is a tidal wave of rate reductions about to hit following the decision by the Bank of England to hold the base rate today, which was better than lender expectations of another increase.
‘This will give lenders confidence we are near or at peak and therefore they will continue their rate war to win market share.
‘This is great news for homeowners and those planning to buy, and will pump some adrenaline into the heart of the property market.’
Samuel Bull, senior mortgage adviser at Huddersfield-based mortgage broker, JB Mortgages, agreed that more lenders are likely to follow Nationwide’s lead
He adds: ‘Nationwide was quick off the mark reducing its product range following the Bank of England’s decision to hold the base rate at 5.25 per cent.
‘Five-year swap rates are currently around 4.5 per cent, which would suggest it is only a matter of time before other lenders follow suit. Let the rate battle commence.’
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