Fixed-rate mortgages below 4 per cent are back on sale to homebuyers for the first time since February, with brokers hoping this is a “sign of things to come”.
Nationwide Building Society announced on Wednesday it would cut interest rates by up to 0.25 percentage points across its two-, three- and five-year fixed mortgage products.
As part of the changes, the company will offer a five-year fixed interest rate of 3.99%, which will be offered to new home buyers. People who wish to borrow up to 60% of the property’s value.
The last time five-year fixed-rate bonds below 4% were available was at the end of February.
Lenders such as HSBC and Halifax have recently been gradually reducing the cost of new fixed-rate deals, with some mortgage brokers heralding what could be the start of a “summer of savings” for homebuyers and homeowners looking to refinance their mortgages.
Nicholas Mendes, mortgage technical manager at broker John Charcol, said: “Nationwide is the first lender to finally break through the 4% benchmark after cutting rates in recent weeks. This is great news for borrowers and marks a major change in the mortgage landscape after the rate increases of recent months.”
He added that the 3.99% interest rate only applies to home purchases, and those looking to refinance their mortgages will have to wait a little longer.
“It seems likely that banks like HSBC will reprice again to gain an edge over others,” Mendes added.
Mortgage costs have been on a rollercoaster ride over the past two years, with Chancellor Liz Truss’s September 2022 mini-budget pushing up the cost of new fixed rates, then falling significantly earlier this year before starting to rise again before falling again.
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Emma Jones, managing director of broker When The Bank Says No, said: “This is a big moment… lenders are [Bank of England] “We could see a cut in the base rate in August or shortly thereafter, which could see interest rates continue to fall.”
Nationwide’s housing director Henry Jordan said the latest rate cuts, which include the reintroduction of rates below 4 per cent, “further strengthen our position as the most competitive lender in the market”.
